Mortgage glossary
Definitions: LTV, amortization, 1st/2nd rank, fixed rate, etc.
These calculators do not constitute financial, tax or legal advice. Rates, rules and bank policies change. Consult a licensed advisor before any purchase or borrowing decision.
- LTV (loan-to-value)
- Ratio between loan amount and property value. In Switzerland, financing rarely exceeds 80% without extra collateral.
- Amortization
- Repayment of principal. On the 2nd mortgage (65–80% LTV), direct amortization is usually required over 15 years.
- 1st mortgage
- Tranche up to about 65% of property value, often without mandatory direct amortization.
- 2nd mortgage
- Tranche between 65% and 80% LTV, usually amortized.
- Fixed rate
- Constant rate for an agreed period (e.g. 5, 10 years). Very common in Switzerland.
- SARON / variable rate
- Rate indexed to the Swiss money market. Can vary with market conditions.
- Imputed rental value
- Theoretical tax charge for owner-occupiers, considered in some affordability calculations.