Lowest value principle

The lowest value principle (or lower of cost or market principle) dictates that, for purposes relating to property mortgage finance or property ownership transfer of any kind, the lower of a property’s realizable market value and the purchasing price (that is the collateral value) takes precedence. The lowest value principle is crucial to mortgage viability checks (see loan-to-value ratio).

More information:
Swiss mortgage rates compared
What is a loan-to-value ratio?
What is a second mortgage?
Indirect Amortization - simply explained
Amortization - simply explained
Affordability explained

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