In Switzerland, when a mortgage covers more than 2/3 of a home’s collateral value, the outstanding portion of the mortgage (above the 2/3 mark) is known as a second mortgage.
Banks and insurers often charge higher mortgage rates for a second mortgage. This is justified by the high loan-to-value ration (over 2/3), which brings a higher level of risk for lenders.
Second mortgage - example
Collateral value (purchasing price): 600,000 francs (100%)
Down payment: 120,000 francs (20%)
First mortgage: 400,000 francs (66 2/3 %)
Second mortgage: 80,000 francs (13 1/3%)
Total mortgage: 480,000 francs (80%)