The term schedule may sound a bit barbaric but in Switzerland, it is a fundamental document when buying real estate.
What exactly is your mortgage deed?
Unless you are very wealthy, it is very likely that you have taken out a mortgage to buy your property. This is the case for the vast majority of residents in Switzerland who want to become a homeowner.
This mortgage obviously requires the payment of the associated interest as well as its eventual repayment.
A mortgage deed is a document that guarantees the creditor, such as a bank, the repayment in question. In practice, a mortgage deed is entered in the land register by means of a sheet of paper mentioning the amount that the creditor can claim from the debtor (the borrower).
It is a notary who carries out the necessary tasks in this regard in order to formalize the procedures concerned.
To be even more precise, it is sufficient to refer to Article 842 of the Swiss Civil Code which describes a schedule as: "A personal debt secured by a pledge of real estate".
Is it prevalent all over the world?
Not at all. It is a Swiss speciality dating back to the Middle Ages. A was a document acknowledging that you owed a sum of money.
Paper or virtual format?
Indeed, the paper format was the one used until 2012. When the schedule was drawn up, it was kept in a secure location by the bank or an insurer.
If the paper document disappeared for any reason, so did the money-back guarantee.
This is one of the reasons why the digital version has become widely available since 2012.
What is it?
This is known as a "register" schedule. In short, this schedule can be compiled electronically.
It is important to know that a paper schedule can be nominative or bearer. In the case of the register schedule, it is systematically nominative.
It is called a register because it refers to the registration of the schedule in the land register. Security is therefore increased both from a classification point of view and from a debtor's point of view; the latter being known.
How exactly is it formed?
There are three steps:
1) A pledge agreement is drawn up between the bank (most often) and the new owner of the property. This contract is then materialized in the form of a mortgage note.
(2) The application for registration in the land register shall be made. For this purpose, the notarial services use a platform owned by the SIX Group called Terravis.
3) Once the registration is finalized, the registry mortgage note takes effect.
What after I pay off my loan?
The mortgage note is a kind of credit instrument. In this sense, it can be reused to finance other projects such as extensions, renovations or additional developments.
The advantage is that you don't have to pay any new fees to establish a new schedule.
For those with a paper schedule, it is therefore essential to have it physically when the time comes, otherwise you will be forced to pay for this service again.
The same applies if you wish to cancel a schedule once the full refund has been made. Without the physical document (if you don't have a register schedule), you can only go to court to do so.
Speaking of repayment, you should know that there are two tiers that make up your mortgage. The second rank must be repaid before you retire over a defined maximum period of 15 years.
When this is achieved, you will pay interest on the first rank which is equivalent to 65% of the purchase amount.
How much does it cost?
If you add up taxes, notary fees, land registry fees, the cost is about 2% of the amount borrowed.
It therefore costs around CHF 20,000 for a loan of CHF 1,000,000. This is not trivial.
It is all the more important to secure a paper mortgage note because, as a buyer, you can benefit from a free transfer or transfer of a note by the seller of the property. This is free of charge and legal.
What if I don't repay my loan?
The schedule allows your creditor to take the necessary steps to recover the amount lent or the interest owed.
More precisely, it is a request for priority reimbursement in the context of the sale of the property as collateral.
If the interest or the amount of the loan as a whole (2nd rank) is not repaid within the time and conditions negotiated at the outset, the bank can use the schedule to recover its money.
In addition, a schedule also guarantees accrued interest, prosecution costs and default interest. Needless to say, it is strongly advised to honour your commitments.
Finally, if the auction of your property does not cover the entire balance due, the creditor is entitled to have the assets from your entire estate seized.
Consumer credit?
When you are thinking about renovation, a study of your schedule is advisable.
There is also the "personal loan" solution, which offers the advantage of not incurring any administrative costs and requires a simple application to apply.
The procedure is quick and easy. All you have to do is simulate the desired amount, determine the repayment period and you will get the monthly payment that takes into account the interest rate applied.
Get advice on how to put together your application to maximize your chances of acceptance. A financing platform such as Milenia will be able to guide you in your choices and the supporting documents to be provided. The advantage of using this platform is the range of partner banks that will be positioned to process your file. This will give you the best conditions available on the market.
Another advantage is your freedom to be able to anticipate full repayment or even reassess your credit. There's nothing stopping you from doing so, and the associated fees are usually non-existent.
Of course, whether it's a mortgage loan or a renovation loan, it's essential to carefully study your financial health and make choices that respect your needs and your budgetary reality.
With a consumer loan, there is no schedule. However, a financial commitment remains contractual and binds you.
So make the right choice by getting advice from a credit expert in order to make your dreams come true in the right conditions.
Milenia, our expertise at your service. Visit our blog to learn more.
