What is a mortgage : Complete guide


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When taking out a mortgage, you often need to offer solid guarantees to the lender. More and more individuals are choosing the mortgage loan. It's now possible to make your application directly online, as with most banking transactions. You may even be able to get an attractive rate. Nevertheless, you need to master the nuts and bolts of this guarantee system before you take the plunge. In particular, there are a few tips to help you put together your file.

What is a mortgage loan?

A mortgage loan is a bank loan secured by the pledging of one or more properties. In other words, in the event of repayment difficulties, your bank has the assurance of being able to repay all or part of the loan, thanks to the property you already own. There are three main types of mortgage, from which you'll need to choose.

Amortizing mortgage

The amortizing mortgage and the one that comes closest to a conventional mortgage. Each month you pay a monthly instalment, comprising amortization of the capital and interest on the loan. Here, the mortgaged property only acts as collateral, in the event of difficulty in payment.

In Fine Mortgage

A mortgage can be a loan, for which you pay only the interest each month. At the end of the full interest payment, you repay the capital outstanding.
It can also be a capitalization of interest, with the possibility of paying nothing for the entire duration of the loan. At the end of the credit period, you repay the capital as well as the interest. This second option is particularly relevant if the property purchased is intended to increase in value, notably through renovation.

Mixed mortgage

The mixed mortgage is a kind of hybrid solution, between the first two types of mortgage presented. During an initial repayment phase, lasting from 1 to 5 years, you repay only the interest. Over a second period, you repay the capital.

Why bet on the mortgage loan?

The mortgage loan is a fantastic solution for reassuring the lending organization. In fact, simply taking out loan insurance is not always enough to validate your application.
From the customer's point of view, the mortgage loan can bring you precious savings. Indeed, you will potentially not have to pay for loan insurance, which can amount to several thousand euros over the entire term of the loan.
Furthermore, using a mortgage loan can enable you to negotiate the rate on your home loan. This solid guarantee is often very attractive to banks.

Online mortgages: how to use

Building up equity

For over a year now, the Swiss National Bank has been reaffirming the need to have your own in order to qualify for a home loan. Your own funds can be made up of savings, or even property you've already bought.
You can also use the famous 3rd pillar. This private provident fund, which is used among other things to prepare for your retirement, can be used to help you finance a real estate project. Don't hesitate to get in touch with the organization offering you this solution.

The valuation of the mortgaged property

To be able to submit your application, even online, you will need an appraisal of the value of the mortgaged property. The initial application, made on the Internet, does not require any supporting documents. To be able to confirm your application, and obtain final approval, you will nevertheless need an official document.
As a reminder, the valuation for the purpose of a mortgage must be formalized by a notary. This enables the bank to be sure of the value of the property pledged to secure the credit.

The borrowable amount

Another advantage of applying online is that you can quickly check how much you can borrow. Your income is generally the basis for calculating your borrowing capacity. Most banks require that monthly repayments do not exceed 33% of your income.
Within this 33%, any loans you may have taken out previously will be taken into account. You therefore need to take stock of your overall income. To find out more: How do I calculate my mortgage?

Assessment of the borrower's profile

To obtain a mortgage online, the lender analyzes your profile in the same way as when you visit a branch. In addition to your income, your various characteristics will be analyzed. Age, for example, is an essential criterion for allowing the acceptance of your project.

Defining the rate

Taking into account all the elements specific to your profile and your property, the bank can offer you a rate. The main advantage of an online mortgage is that you benefit from advantageous rates. Indeed, organizations offering their services exclusively online have fewer structural costs. They are therefore potentially more competitive. Online services can also save you precious time!

Why use an advisor?

Using a financial advisor, to take out a mortgage online is an ideal solution. As you can see, your profile will be scrutinized by the bank. To put the maximum chances on your side, it's in your best interest to entrust your project to a professional so that you can comparison the different rates on offer

Easier procedures

Financial advice from a Swiss firm will first of all make your administrative procedures easier. Many expatriates choose to call on an expert, to activate all possible levers, to enable the realization of their projects. For example, French nationals sometimes find it difficult to grasp the particularities of the Swiss system. It is therefore primordial to be accompanied
Moreover, all you have to do is provide the documents, to the consultancy firm you have chosen. The person who accompanies you takes care of everything, to put together your file, as well as a strong argument to defend your project.

A considerable time saver

Most of the time, when you want to take out a mortgage, you turn to several lending organizations. This is the best way to get the best financing solution, but also the most attractive rate. Online procedures make this step much easier.
The fact remains that researching documents, banks, and presenting your project can be time-consuming. So even online, calling in the experts can save you precious time. You'll get regular reports, so you can keep track of your progress. You'll avoid all the stress associated with this type of approach.

A network at your disposal

A financial advisory expert is used to applying for mortgages. He can therefore potentially let you benefit from his network, by presenting your file to partner banks.
You also benefit from his network, to find the right professionals to accompany your file. In particular, he will be able to help you simply carry out the valuation of the property you wish to mortgage to secure your loan.
If you would like to find out more about our team's ability to assist you with your online mortgage application, please do not hesitate to contact us. We'll be happy to answer any questions you may have. We can also share with you our working methods, which enable us to present your real estate acquisition project in the best possible way.

Find out more about mortgages offered by different insitutions

Valery Chantepy
Updated on: 31.01.2024Written by Valery ChantepyHead of mortgage department at Comparea
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