What is a Hypothecas, what are the situations in which it applies and which is best?

Some people are familiar with the subject, others have never needed to delve into it. For the latter, we would like to explain in a few words what a mortgage is.

In most cases, in order to purchase a property, equity capital is not sufficient and it is therefore necessary to resort to a so-called loan or mortgage – more commonly known as a Hypothecas. For the lender – usually a bank – the security is a lien on the property purchased.

To obtain a Hypothecas and finance the purchase of a house or flat, you must have equity of at least 20%.

As a rule, 33 % of gross income is required to cover the total costs of the property. The annual costs for financing a property consist of:

Mortgage interest, calculated at 5 % of the mortgage loan, to secure the financing even if interest rates rise;

Depreciation (repayment) of the second Hypothecas;

Accessory costs of 1 % of the purchase price (for each year).

Before buying a house, it is a good idea to check the sustainability of the financing.

Types of hypothecation

There is no single Hypothecas; on the contrary, there are numerous mortgage models that differ in their conditions.
When taking out a Hypothecas, we recommend that you discuss your financial situation and available options with a financing expert. In this way, you will be able to find the Hypothecas that best finances the home you want.

Fixed-rate Hypothecas

A fixed-rate Hypothecas usually has a duration of two to 15 years with a fixed mortgage rate and a fixed amount. In this way, you can protect yourself against rising interest rates and plan your budget more easily.
As part of the fixed-rate mortgage, some lenders also offer the possibility of fixing the mortgage rate in advance, up to three years before a new Hypothecas is granted or an existing mortgage is extended.

Variable-rate Hypothecas

Unlike fixed-rate Hypothecas, variable-rate Hypothecas – as the name suggests – have a variable interest rate and adapt to market conditions. Their advantage is that they do not have a fixed duration or a fixed interest rate.

SARON or money market Hypothecas

Money market Hypothecas also offer a variable interest rate. But not just any interest rate, but the SARON. SARON is an abbreviation of Swiss Average Rate Overnight and is a reference rate for the Swiss franc on the SIX Swiss Exchange, which is closely based on the official Swiss National Bank guide rate.
The interest rate in the case of a SARON Hypothecas is composed of an interest rate linked to the reference rate and an individual creditor surcharge. The interest rate is usually communicated retroactively at the end of the settlement period of one to three months. The term is one, two or three years.
SARON Hypothecas are particularly suitable when money market interest rates are expected to fall. However, if interest rates rise, mortgage costs will be high.
These are suitable for those who wish to know the mortgage interest at the beginning of the tranche.

We hope that this brief explanation has been helpful and invite you, should you have any questions on any real estate topics, to contact us, we will be happy to discuss the topic further in our ‘ImmoTipps’ section.

Your anfina team