Calculating mortgage amortization

Would you be able to help me find out how much I need to repay every year in order to amortize my mortgage?

These are the figures I am dealing with in CHF:
Market value: 700,000
Down payment: 200,000
Annual interest rate: 1.05% (PostFinance) x mortgage = 5250
Gross annual income: 116,000
Amortization term: 15 years
Annual property maintenance costs: 1% x market value = 7000

Total annual costs: annual mortgage interest payments + annual amortization payments + annual maintenance costs

Can you show me exactly how I can find the amortization rate of my mortgage?

According to PostFinance, only CHF 2077 of the mortgage debt would be amortized every year. That seems like very little considering the full debt is CHF 500,000.

Thanks for your help.

Greetings,

The second mortgage is the part of the mortgage which you need to amortize. You can learn more about second mortgages here.

In Switzerland, two-thirds of the collateral value of a mortgaged property must be paid off within 15 years. The total amount you need to amortize is calculated like this:

Second mortgage = total mortgage - (first mortgage) or
Second mortgage = total mortgage - (collateral value * 2/3)

At some banks, the calculation is based on a percentage rather than exactly 2/3 or collateral value. Some use 66% while other use 67% of the collateral value in calculations.

The portion of the mortgage which must be amortized is divided into equal installments across the term of the second mortgage. To find out how much you need to pay every year to amortize your mortgage, just divide the second mortgage by its mortgage term.

Annual amortization payment = second mortgage / term of second mortgage

In your case, PostFinance calcualted your second mortgage as 67% of your full mortgage. So the following calculation applies:

(CHF 500,000 - (CHF 700,000*0.67) / 15 years = CHF 2067 per year.

Best regards from Moneyguru

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