Mortgaging a home to yourself

Can you explain to me how a Swiss "Eigenhypothek" works? How can I mortgage a home to myself?

Greetings,

In Switzerland, a person contributing to retirement savings (occupational pension fund or private retirement savings) can take out part of their retirement savings as a home loan.

Assets are not pledged (as with indirect amortization) nor are they withdrawn early. Instead, the person acts as both the mortgagor and the mortgagee. The interest paid for the mortgage is tax deductible, as with interest on mortgages from other lenders.

However, there are rules in place which regulate retirement-savings mortgages. The most significant of these is that a maximum of 10% of retirement savings can be borrowed against a mortgage. You can find further rules regulating mortgages backed by retirement savings at oak-bv.admin.ch.

It is also worth noting that not all financial services providers allow these mortgages. Currently, only a relatively limited number of banks and pension funds make allowances for this option. You can find out which service providers allow you to give yourself a home loan from retirement savings by asking one of the 9 regional retirement scheme supervisory authorities.

In Aargau, for example, this option is currently only offered by several pension funds - no vested benefits foundations allow this type of mortgages.

In central Switzerland, Schwyz hosts a number of retirement services which allow clients to mortgage property to themselves, including the Elite Freizügigkeitsstiftung, Pensfree (PensExpert) and Independent Stiftung. It is likely that more service providers will allow these mortgages in the future.

Liberty does not currently allow for this type of mortage.

Best regards from Moneyguru

More on this topic:
Interactive mortgage comparison
Mortgage affordability explained
Swiss pension fund mortgages explained
Indirect amortization explained