English

Negative effects of indirect amortization

Here you will find the right answers

Forum Banking Forum Mortgages Negative effects of indirect amortization

Your web browser does not support JavaScript, or you have temporarily disabled scripting. This site needs JavaScript to function correctly.

About Moneyland Forum

The moneyland.ch forum lets you exchange knowledge on numerous topics related to money and get answers to your questions at any time. Join forum users and experts in discussions relating to banking, investment, insurance, retirement, telecom and everyday money topics.

Show categories

Forum

Categories

BenutzernameMoneyland User Questions
Status Member
Registriert seit1/27/17
Beiträge2142

February 21, 2017, 4:16:31 PM

How does indirect amortization affect my retirement savings? Are there any negative effects?

BenutzernameMoneyguru von moneyland.ch
OrtSchweiz
Status Expert
Registriert seit8/4/15
Beiträge4072

February 22, 2017, 1:39:21 PM

Greetings,

When you choose to pay off a mortgage using indirect amortization, you have to deposit enough money to cover your second mortgage into your retirement account before the account is closed.

When you close your retirement account, the relevant amount of money must be used to amortize your second mortgage in full.

Making mortgage amortization payments into a 3a retirement account may use up a substantial portion of your annual pillar 3 retirement savings allowance. You can make additional contributions towards actual retirement savings as long as total deposits do not surpass the annual limit. The amount you contribute above mortgage amortization payments is not pledged towards your mortgage, and you can use that part of your 3a assets to fund your retirement.

Best regards from Moneyguru

More on this topic:
Indirect amortization explained
Mortgage comparison
Mortgage affordability explained