Direct and indirect amortisation

Amortisation basically means paying off a mortgage in instalments. 

Example: If you amortise 1% of a mortgage each year, then on a mortgage of CHF 750,000 you will pay back CHF 7,500 per year. Most lenders require you to pay off a second mortgage (when the loan-to-value ratio is over 65%) by the retirement age of 65 or within 15 years.

Amortisation can be direct (paying off the actual amount and thereby reducing the mortgage debt) or indirect (accumulating pledged funds via a pillar 3a account or private pension).

Read more on the subject here: Tax-saving tips

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