{"id":6082,"date":"2023-11-11T16:13:40","date_gmt":"2023-11-11T15:13:40","guid":{"rendered":"https:\/\/ajooda.ch\/en\/?p=6082"},"modified":"2023-11-11T16:13:58","modified_gmt":"2023-11-11T15:13:58","slug":"indirect-amortization-real-estate-with-pillar-3a-switzerland","status":"publish","type":"post","link":"https:\/\/ajooda.ch\/en\/indirect-amortization-real-estate-with-pillar-3a-switzerland\/","title":{"rendered":"Indirect amortization of real estate through pillar 3a"},"content":{"rendered":"\n

If you do not want to amortize your property directly by gradually repaying the mortgage at your bank, you can use indirect amortization through pillar 3a to deposit your 3a as a “collateral” and the property will be amortized in one lump sum at the end.<\/p>\n\n\n\n

In other words, amortization is a contractually agreed repayment of the mortgage. The financing of a home is usually structured as follows:<\/p>\n\n\n\n

    \n
  1. equity (min. 20% of the market value)<\/li>\n\n\n\n
  2. first mortgage (up to 66% of the market value)<\/li>\n\n\n\n
  3. second mortgage (up to 14% of the market value)<\/li>\n<\/ol>\n\n\n\n

    There is no amortization obligation for the first mortgage and the second mortgage must be amortized within a maximum of 15 years or by retirement age at the latest. (Here are the exact guidelines)<\/p>\n\n\n\n

    With direct amortization, the payments reduce the mortgage debt and thus the interest on the mortgage debt decreases. However, this also reduces the amount that can be deducted from taxable income.<\/p>\n\n\n\n

    In contrast, with indirect amortization through pillar 3a<\/a>, the payments go into a pillar 3a and the assets in this third pillar are pledged. This pledge serves the lender as security for the repayment of the mortgage.<\/p>\n\n\n\n

    If you have a pillar 3a with a bank, you can only take out a mortgage with this bank. In contrast, if you have a pillar 3a with an insurance company, you can usually take out a mortgage with any bank.<\/p>\n\n\n\n

    With an insurance policy, you have additional risks covered, which gives the bank more security with regard to repayment in these cases.<\/p>\n\n\n\n

    Am I the only one who benefits from indirect amortization?<\/h2>\n\n\n\n

    Banks usually recommend indirect amortization. This is due to a conflict of interest, as it is advantageous for the bank for the following reasons:<\/p>\n\n\n\n