The ABCs

of financing
The essentials of financing
your own home
Dear Readers

Most Swiss houses and apartments are in the hands

of private owners. Real estate is the biggest asset
held by Swiss households. The economic importance
of real estate cannot be overstated, and the home
also holds immense emotional value for families as
the center of their lives together.

Managing these assets responsibly means making

the right decisions in terms of financing, insurance
and maintenance. It also requires extensive expertise
and experience. Our expert advice will help you
to establish a financially solid foundation for your
property.

Do you already have a dream property in mind?

This brochure provides you with the most important
information you need on financing your home.
You’ll get practical tips and learn how to reach your
goal with the help of our support and advisory
services.

Personal advice at UBS doesn’t end when you sign

your mortgage contract, but covers all aspects of
owning a home, including wealth and tax planning,
investment decisions, inheritance and gifts and
pension and retirement planning. At every stage,
we’re by your side – whether you’re just beginning
to save for your own home, buying or building
a property, investing in your home or planning for
your retirement.

Deborah Fürstenberger
Product Management Mortgages & Corporate Loans

3
Table of contents

6 Financing rules and saving for your own home

10 The real estate market and real estate valuation

14 Renovation and conversion

18 The mortgage mix

22 Tax considerations

28 Protecting your partner and family

30 Advice

32 Glossary

4 5
Financing rules and saving
for your own home
Buying your own home is a big invest-
ment – for many, it’s the most im­
portant investment of their lives. To
realize their dream of owning a home,
buyers or builders must put down a
small portion of the financing them-
selves. The larger portion of the
purchase price or investment costs is
usually covered by a mortgage.
It’s generally possible to finance up to
80 percent of a property’s value by
taking out mortgages. For amounts up
to two-thirds of a property’s value,
this is what is known as the first
mortgage. This part of your financing
does not need to be amortized, i.e.
it does not have to be repaid. The rest
of this share is financed via a second
mortgage, which must be amortized
within 15 years.
6 7
Affordability must
be guaranteed
assuming an interest
rate of five percent.
The remaining 20 percent must be
provided by the buyer in the form of
equity, with no more than 10 percent
of the property’s value coming from
an early withdrawal or pledge on
an occupational or private pension fund.
At least 10 percent of the financing
must be so-called hard equity, i.e.
account balances, funds from pillar 3a,
insurance policy surrender values
or proceeds from the sale of securities.
Advances on inheritance and gifts,
but not interest-bearing or repayable
loans, can also be counted as equity.
Ensuring an affordable
mortgage
Buying a property is a long-term
investment, so a mortgage has to be
affordable in the long run. The afford-
ability of a mortgage can be assessed
using the following calculation: To
ensure that financing rests on a solid
foundation even in times of high
interest rates, an imputed annual five
percent interest rate is applied to the
full financing amount. The amortization
mentioned above, and an imputed
one percent of the property’s value to
cover maintenance and ancillary costs,
are added to this. Basing this calcula-
tion on current rates during a phase of
low interest will of course yield lower
property costs. However, the loan
will be granted using an affordability
calculation based on an interest rate
of five percent.
Imputed costs may not exceed one-
third of your gross income. Your
gross income for this calculation also
includes the thirteenth-month salary
and any other long-term salary
components. Two-income households
can add up their incomes, provided
the partners are jointly and severally
liable for debts.
By entering your equity and gross
annual income into the UBS mortgage
calculator, you can find out whether
you’re currently able to afford
the property you’ve set your sights on.
  ubs.com/mortgage-calculator
 Examples of financing for owner-occupied property, including interest
costs, amortization and maintenance and ancillary costs

Property value Annual imputed Annual imputed Minimum gross

costs costs* salary required*
400,000 80,000 23,556 70,667
600,000 120,000 35,333 106,000
800,000 160,000 47,111 141,333
1,000,000 200,000 58,889 176,667
1,250,000 250,000 73,611 220,833
1,500,000 300,000 88,333 265,000
2,000,000 400,000 117,778 353,333
Following a savings plan You should start planning for your
If you have a financing gap in your retirement early on. The income you 3,000,000 600,000 176,667 530,000

equity that needs closing, your UBS
client advisor will help you implement
a carefully designed savings plan.
Pillar 3a is a particularly suitable instru-
ment for this, as anyone in employ-
ment can use it to make annual
receive from the OASI (Old Age * Calculations are based on
and Survivors Insurance – AHV) and an imputed rate of interest
of five percent, amortization,
your pension fund in later life tends to maintenance and ancillary
be lower than what you earned while costs of one percent of the
property’s value and a loan-
in employment. Nevertheless, the to-value ratio of 80 percent.
financing rule mentioned above also Source: UBS

deposits that are fully deductible from
their taxable income. The UBS Fisca
account and the UBS Fisca custody
account for investing in securities are
simple solutions for this.
Financing after 50
After the age of 50, certain additional
aspects need to be considered. If you
wish to use funds from your pension
scheme, you have a choice: you could
either use half the current vested
benefits, or the total sum of the vested
benefits that you would have been
entitled to at age 50.
applies after retirement: The imputed
costs of your home may not exceed
one-third of your gross income. Your
personal retirement planning as well as
the amount of your mortgage to be
paid off in old age must take account
of these facts.
Financing vacation and
investment properties
Different financing rules apply for vaca-
tion and luxury properties. The equity
portion needed is higher, with a
required ratio of equity to borrowed
capital of 40 : 60, rather than the 20 : 80
ratio needed for a home. Your UBS
client advisor will be happy to help you
decide on the best financing solution.
This will also involve tax considerations,
such as the taxation of the property’s
imputed rental value.
For investment properties, the rules are
different again. Here, mortgages for
up to 80 percent of the property’s value
can be granted once factors such as
rental income, administrative expenses,
vacancy risks and maintenance and
renovation costs have been considered.
No funds from pillars 2 or 3a may be
used as equity for vacation and invest-
ment properties.

8 9
The real estate market
and real estate valuation
The price of a property depends on
supply and demand in the local real
estate market. Individual regions,
municipalities and neighborhoods are
not equally popular among buyers,
while the real estate market can also
experience longer periods of rising
or falling prices, depending on
the economic cycle and interest rates.
It therefore makes sense to carefully
watch the market and learn to recog-
nize the peculiarities of any given
situation. UBS’s real estate experts
monitor current developments very
closely, can provide you with vital
background information, and will
support you with sound recommen-
dations.
10
Publications such as UBS Real Estate
Focus and the Swiss Real Estate Bubble
Index offer a crucial basis for objec-
tively assessing the advantages and
disadvantages of a location. Whether a
property is a stable investment over
the long term depends to a significant
degree on the location. The UBS
Real Estate Local Factsheets provide
information on all 2,256 Swiss
municipalities, including the taxes
levied, demographic trends and local
property price developments.
Tip:
The UBS real estate market contains the latest
real estate listings from ImmoScout24 and
UBS. Who knows, maybe one of them is your
dream home?
ubs.com/real-estate-market
Valuing residential The share of borrowed capital
property correctly (mortgage) is always calculated on the
The decisive factor when granting basis of the market value determined
a mortgage on a property is its market by the bank – even if the property’s
value as determined by the bank. This purchase price or investment costs are
is not necessarily equal to its invest- higher. Where the purchase price
ment costs or the asking price. In or investment costs are higher than
around 80 percent of cases, the value the market value, the difference must
of owner-occupied property is esti­ be financed using equity that does
mated using the hedonic method. This not come from pillar 2 (either as an
involves a computer-based tool that early withdrawal or as a pledge).
records the property’s various charac-
teristics and location, and uses this
to calculate its current market value,
mainly on the basis of factors such
as the property’s micro- and macro-
location, living space, size, year of
construction, construction standard,
current state, etc.

Special properties, such as very expen-

sive houses in exclusive locations,
usually require an individual assessment
and cannot be evaluated by simply
applying standard models. Tip:
Ask your client advisor for the UBS Real Estate
Local Fact Sheet for your municipality.

12
Renovation and conversion
All real estate loses a certain amount
of value with age. The various materials
and parts of the building are very
exposed to weather and other forces,
and will need to be repaired or re-
placed at some point. Regular mainte-
nance of the building and a strategy
for larger-scale renovations are essen-
tial to maintaining the value of a
property over the long term. Bear in
mind, too, that certain features, parts
or paints may no longer meet current
standards after some years.
From a technical point of view,
a heating system has an average
lifespan of 20 to 30 years, and interior
surfaces last an average of 15 to
30 years, according to consultants
Basler & Hofmann.
14
The UBS renovation calculator
The UBS renovation calculator helps
you to calculate and plan for renovation
costs by estimating the renovation
requirements associated with your
property based on statistical experience.
The extent to which a property re -
quires renovation can be ascertained,
for example, from the life cycles
of the various parts of the building.
Your UBS client advisor will discuss
and establish the basic data on your
property with you, including, for
example, its insurance value and year
of construction, and when it was last
renovated. You’ll receive an initial cost
estimate based on this information to
use in your further planning.
If you decide to undertake renovations
or modifications, you should also
look ahead and take account of future
needs and wishes in your plans.
Children, for example, will become
teenagers and need more space.
And once they move out, you’ll need
to consider how your requirements
change and what modifications to
make in anticipation of your retirement.
Maintaining and increasing
a property’s value
Investments to maintain a property’s
value primarily comprise recurring
maintenance and repair of the building
and surrounding area. Replacing
existing elements with equivalent
fittings (such as heating systems) also
serves to maintain a property’s value.
Such investments are treated differently
to investments aimed at increasing
a property’s value, such as installing
additional or more expensive appliances
in the kitchen, bathroom or cellar.
Most development or extension work,
such as loft conversions, fitting a sauna
or adding on a sunroom, are also
typically considered to add value to
a property.
Regular maintenance and long-term
renovation planning are essential
for homeowners for several reasons:
• The salability of your property
depends both on its location and to
a large extent on its condition.
• Non-renovated buildings that are not
immediately ready to move into often
prove less marketable; finding a
buyer usually takes longer and there
is less scope for price negotiations.
• Renovating your property – especially
to improve its energy efficiency –
not only reduces its carbon footprint,
but also helps lower heating and
ancillary costs. This often increases
the market value of a property.
Tip:
Ask your UBS client advisor for a calculation
of your property’s renovation requirements
and use this initial rough cost estimate as
a basis for your further plans.
ubs.com/renovate
15
Even significant investments in your Renovations are subject to the same
property can be deducted from your financing rules as purchases. After
taxable income, provided they are the renovation, imputed interest,
aimed at preserving the value of your amortization and property mainte-
real estate. The same is true for envi- nance costs may not exceed a third of
ronmental and energy-saving measures. your available gross income, and the
It’s therefore advisable to include tax share of borrowed capital may not
aspects in your planning. From a tax exceed 80 percent of its market value
point of view, for example, it makes as set by the bank. The market value
sense to modernize your house in stages of your property will not necessarily
as this allows you to reduce progressive increase by the amount invested in
taxation over several years. the renovation – for instance, there is
no increase in cases where some of
Securing financing the work carried out falls under periodic
You should be able to cover regular building maintenance.
maintenance and smaller repair costs
out of your own pocket. For larger
scale redevelopments, renovations or
extensions, we offer tailored financing
solutions. In this phase, too, careful
preparation and planning of all relevant
aspects is essential. Why not discuss
your renovation plans with your UBS
client advisor? They will be able to offer
you advice on financing and feasibility
based on detailed plans, project
descriptions, cost estimates and offers.

16
The mortgage mix
We recommend choosing a mix of
products and maturities wherever
possible. This approach allows you to
better diversify potential risks, such
as the interest rate risk for mortgages,
in a similar way to how you would
for cash investments. By staggering
maturities you can avoid having to
renegotiate your entire financing in an
unfavorable interest rate environment.
Mortgages with a fixed rate
of interest
Fixed-rate mortgages offer a fixed
rate of interest, as well as a fixed term
of two to 10 years. This means you
avoid being exposed to fluctuations in
interest costs during the term of your
mortgage. Fixed-rate mortgages also
have the advantage of enabling you
to secure a low interest rate for several
years in favorable market conditions.
We recommend splitting your mort-
gage into several tranches to mitigate
interest rate risks. This results in
staggered maturity dates.
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If you expect interest rates to be higher
than now at the end of your current
UBS Fixed-Rate Mortgage or future
UBS mortgage term, you can protect
yourself against this by fixing the
interest rate on your new UBS Fixed-
Rate Mortgage up to 12 months in
advance. So the rate of interest is fixed
and the mortgage paid out on different
dates. For this, you will pay a small
additional interest rate fee. As a rule,
the earlier you take out a UBS Fixed-
Rate Mortgage, the higher this will be.
Mortgages with Libor-based
interest rates
Libor (London Interbank Offered
Rate) mortgages are based on the CHF
Libor rate. The CHF Libor rate is the
interest rate that prime banks offer
each other on short-term deposits in
Swiss francs. It is published daily in the
media and reflects the general interest
rate level for short-term deposits in
Swiss francs.
You can take out a UBS Libor Mort-
gage at any time. When taking out the
Your personal mortgage profile
If you want to be able to enjoy your
mortgage, you select a certain fixed own home with peace of mind in
interest period (3, 6 or 12 months). the future too, then finding the right
At the end of this fixed interest period, mix of short- and long-term mortgages
the interest rate is adjusted in line is essential. Your personal mortgage
with current money market conditions, profile and our financial expertise
i.e. with the CHF Libor rate. The provide the basis for doing just that.
interest rate comprises the CHF Libor
rate plus a fixed margin. We’ll meet with you to analyze your
financial circumstances, your risk
Libor-based financing makes sense tolerance and your interest in the
when interest rates are expected to fall financial markets, and use the results as
or remain the same and the client has the basis for defining your mortgage
some financial room for maneuver. profile.
By contrast, fixed-rate mortgages are
ideal for clients who prioritize certainty
and want to be able to plan better
in advance.
Just as there is no such thing as the
“perfect” product in asset manage-
ment, when it comes to loans, the
various solutions all have advantages
and disadvantages. Fixed-rate
mortgages involve the risk that the
fixed term will end during a phase
of high interest rates. It must also be
considered that borrowers are still tied
to fixed-rate mortgages even if interest
rates fall unexpectedly. Libor mort­
gages involve risks during phases Tip:
of rising interest rates as the applicable You can reduce the interest rate risk by
interest rate is periodically adjusted combining various products with different
in line with the new market rate. maturities. Subscribe to our interest rate
forecast and keep up to date with the
current interest rate level and interest rate
developments.
  ubs.com/interest-rate-forecast
19
The three mortgage profiles

Profile / criteria Risk tolerance Financial flexibility Interest /

knowledge

Stable I want to know I work to a tight I don’t follow

what I’m paying. budget. interest rates.
Balanced I can accept I can afford a certain I take a passive
moderate interest amount of interest interest in interest
rate volatility. rate fluctuation. rate trends.
Market-oriented I can also accept I have enough of a I take an active
higher interest rate cushion to cope interest in interest
volatility in the with interest rate rate trends.
short term. fluctuations.

There are essentially three different
profiles: “Stable”, “Balanced” and
“Market-oriented”. With a “Stable”
strategy, the focus is on a fixed budget
and being able to plan in advance.
The “Balanced” option is suitable for
clients with somewhat more financial
room for maneuver and who can
tolerate a certain degree of interest
rate fluctuation. By contrast, the
“Market-oriented” strategy is for clients
who wish to actively follow develop-
ments on the financial markets and
who have enough of a cushion to cope
with significant interest rate fluctua-
tions over the short term.
Your UBS client advisor will be happy
to take the time to draw up a personal
mortgage profile for you and put
together an optimum financing
proposal based on this. Thanks to our
comprehensive advisory expertise, you
can feel confident that you’ve made
the right choice.

20
Tax considerations

As soon as you buy your home, taxes when interest rates are low – when Possible impact of owning property
and fees are due – depending on the you pay less interest on your loans –, on your taxable income
canton, these may include real estate the imputed rental value is often higher
transfer taxes as well as land register than the deductions. In all cases, it
and notary fees. When you move makes sense to get good financial and - CHF 3,360
+ CHF 16,800
from one area to another, the level of tax planning advice. Maintenance,
flat rate of - CHF 12,000
income tax and wealth tax usually Imputed
rental value 20% from
the imputed Mortgage - CHF 2,400
changes as well. This is not just with When buying a home, as well as when
regard to buying the property – in- inheriting or being given a property, rental value interest Lost income - CHF 6,000
CHF 85,000 from invested Indirect
creases in value, renovations, bequests other duties must be paid, which again equity (assum- amortization
or gifts, and selling the property all vary from canton to canton. These tion: 2%) into pillar 3a CHF 78,040
have tax implications. It’s worth include land register fees and real
clarifying and taking into consideration estate transfer taxes as well as inheri-
the tax consequences of each individual tance or gift taxes. If you sell your Taxable income Taxable income
step in advance. home and generate a profit against the without property with property
price you paid and any value-enhancing ownership ownership
Owning your own home has a double investments made during the period
impact on your taxes. Firstly, your of ownership, real estate capital gains  A ssumtions
Market value: CHF 600,000
home is taxed as an asset and secondly, tax also applies. This tax can be Invested equity: CHF 120,000
tax is paid for the use of the property – deferred if you can claim a so-called Mortgage: CHF 480,000 (2.5% interest rate)
the so-called imputed rental value, replacement purchase when buying
which is added to your taxable income. another property.
Whether the amount you can deduct
for costs relating to interest payments
and building maintenance offsets the
imputed rental value depends on your
individual circumstances. Especially

22 23
Indirect amortization
Depending on your situation, it can
be a good idea from both a tax and
a financial perspective to make use
of indirect amortization. Here, the
amortization payments are not used to
pay off the mortgage debt directly,
but are paid instead into a pillar 3a
account, for example. Tax deductibility
thus remains intact in respect of the
mortgage interest, which is advanta-
geous from a tax point of view.
In addition, payments into pillar 3a
accounts can also be deducted
from taxable income. The maximum
amounts that can be paid in vary
according to whether a person is
a member of a pension fund, and are
usually readjusted every two years.
With indirect amortization, the funds
in the pillar 3a account are pledged
to the bank and are used to repay the
mortgage debt at the latest upon
retirement. Any surplus funds or funds
remaining in the account are then
paid out to the client.

24
Direct and indirect amortization
The annual amount you pay back
does not change, thus reducing your
interest payments.

1 3 5 7 9 11 13 15
Mortgage amount Annual partial repayment

If you opt for indirect amortization,

you do not pay back your mortgage
and the mortgage debt remains
unchanged. The amortization payments
are paid into your pillar 3 scheme,
e.g. UBS Fisca products.

Tip:
It’s always worth clarifying
the tax consequences of each
individual step.
1 3 5 7 9 11 13 15
Mortgage amount Partial mortgage repayment ubs.com/tax

26
Protecting your partner
and family
For home owners, ensuring their
own financial security and protecting
their families are of key importance.
A divorce, an accident, incapacity
to work, disability and death are all
unforeseeable strokes of fate that can
lead to serious financial difficulties –
especially when a family’s income
is primarily generated by one person.
While employed individuals are in most
cases relatively well protected against
the consequences of an accident,
those who find themselves unable to
work due to illness are often faced
with substantial shortfalls. In the event
of illness or death, mortgage payments
may no longer be affordable. In the
worst case scenario, this could mean
that you are forced to sell your home.
The actual risks depend on very
different factors. You should analyze
your retirement plans particularly
carefully if pension fund assets have
been used as financing support.
28
Pension fund
withdrawals can reduce
pension benefits.
Withdrawn pension fund capital that
is not paid back reduces your retire-
ment benefits, and pensions in the
event of disability or death are often
considerably lower. It is therefore
important to make sure that you are
fully informed about the consequences.
A further important aspect to take
into account is the current loan-to-value
ratio. If this is still in excess of a first
mortgage (i.e. two-thirds of the
property value), amortization costs
will also weigh on your household
budget.
The right coverage
Client needs in terms of protection vary
from person to person. In certain cases,
it makes a lot of sense to take out
a life insurance policy on part of the
mortgage amount (e.g. for the second
mortgage). This would mean that
survivors are left with less mortgage
debt to pay off, and would be able to
continue financing their home despite
the drop in income, thanks to sur-
vivors’ benefits. UBS offers suitable
insurance solutions for individuals. The
risk of disability can be covered with
a disability pension. In practice, you can
get protection against different risks
in a single policy. In cooperation with
Swiss Life, UBS offers tailored solutions.
Your UBS client advisor will show
you the various options for ensuring
optimal financial security and protection
for your family.
29
Advice
Purchasing or building a home is an
important step in life. You’ll have to
make decisions with long-term financial
implications. As a market leader in
real estate financing, we will provide
you with step-by-step support during
this phase. We’ll take the time to learn
and understand your wishes and
objectives. This personal approach is
the only way we can offer you a sound
and reliable financing solution that
is precisely customized to your needs.
With our support, you can be sure
of making the right decision at every
stage.
30
An answer to every question
• Would you like to purchase or finance
your own home?
• Are you looking for a financing
solution where you know what costs
to expect down to the last franc?
• Would you like to invest and save
taxes at the same time?
• Do you want extra security because
you have children?
ubs.com/immonews-en
ubs.com/interest-rate-forecast
Good reasons for financing With us, you have a strong partner
with UBS at your side who can help you put your
• We work with you to compile your home on a secure financial basis.
personal financing strategy, which
optimally coordinates your equity Please get in touch. We look forward
input, the mortgage products, to hearing from you!
amortization, and tax implications.
• Our comprehensive advice also takes
account of your needs with regard
to investments and retirement
planning.
• We offer you a complete range
of different mortgage products and
advantageous special offers.
For all your questions
ubs.com/mortgages
UBS Mortgage line: 0800 884 558
31
Glossary
Affordability  Affordability is the ratio
between gross salary and expenditure
on the real estate property. Afford­
ability is expressed as a percentage and
should not exceed one-third of gross
salary. Expenditures comprise:
• imputed interest (e.g. five percent
of the mortgage amount)
• maintenance and ancillary costs
(e.g. one percent of the investment
costs or market value)
• amortization
Amortization  Amortization is the
repayment of a debt in installments.
A mortgage on owner-occupied
property must be amortized in regular
tranches (i.e. linearly) to two-thirds
of the market value within a period
of 15 years.
32
Direct amortization  With direct
amortization the mortgage is regularly
reduced (typically on a quarterly basis)
by a fixed amount. In this way, the
outstanding debt and thus also the
interest burden are continually reduced.
See also indirect amortization.
Early withdrawal of retirement
capital (pillar 2 and pillar 3a)  a loan-to-value ratio up to the limit
If retirement capital is withdrawn early
to finance owner-occupied housing,
the retirement benefits are reduced
accordingly. In contrast to the pledging
of retirement capital this creates a tax
liability. The tax office responsible
for the place of residence will provide
information on request on the amount
of tax due. Early withdrawal of pension
fund capital (pillar 2) is entered in
the land register.
Equity  Generally, financing of owner-
occupied properties requires the
borrower to contribute twenty percent
of the investment costs or market
value in the form of equity, e.g. savings,
inheritance. Part of this can also
be financed by early withdrawal of
retirement capital. Sweat equity
(construction and conversion work
by the property owner) can also be
included, to a limited extent and
subject to certain conditions.
First mortgage  Mortgage loans with
set by the banks of around two-thirds
of the investment costs or market value.
See also second mortgage.
Fixed-rate mortgage  Mortgage
loans with a fixed rate of interest for
an agreed fixed contractual term
(e.g. two percent interest with a term
of five years). For this product, the rate
of interest can be fixed in advance for
an amount to be paid out in the future
(e.g. six or 12 months before the pay
out).
Imputed rate of interest  The mort-
gage lender uses the imputed rate
of interest to calculate affordability.
This rate represents a long-term
average to ensure financing even in
a high interest rate period. Actual
mortgage rates can differ from the
imputed rate.
Indirect amortization  In the case
of indirect amortization, the mortgage
borrower does not make any direct
repayments on the mortgage debt.
Instead, the mortgage borrower saves
the agreed amount on a pillar 3a
retirement pension account which is
pledged to the bank as security for the
mortgage. This increases the retirement
capital, while the mortgage debt
remains unchanged. Indirect amortiza-
tion allows the mortgage borrower
to accumulate retirement capital while
also benefiting from tax concessions
on the retirement capital saving.
33
Investment costs Investment costs
are either:
a) the costs of erecting a new building,
such as land, construction, adjoining
area and ancillary costs (e.g. fees,
building loan interest) or
b) the purchase price of an existing
and turnkey property. Value-adding
investments are also counted as invest-
ment costs. Among other purposes,
investment costs are used to calculate
real estate capital gains tax upon
a sale.
Libor mortgage The rate of interest
is generally variable and depending
on the product is adjusted every 3, 6 or
12 months on the basis of the current
Libor reference interest rate plus
margin. Libor stands for London
Interbank Offered Rate, an official
reference interest rate which is reported
daily by important commercial banks
and published in London.
34
Maintenance and ancillary costs in contrast to early withdrawal of retire-
Generally the owner of real estate ment capital, but are now pledged in
property must expect annual favor of the mortgage lender. The
maintenance and ancillary costs for pledge has no tax implications for the
value preservation and operation retiree.
(e.g. heating, electricity) of one percent
of the investment cost or market Second mortgage Share of financing
value. These costs can be higher for which exceeds the loan-to-value ratio
older properties. of around two-thirds of the invest-
ment costs or market value and has to
Market value The price which can be amortized within a maximum of
be obtained from the sale of a property 15 years. See also first mortgage.
under ordinary circumstances. The
market value is determined by an
expert appraiser based on the intrinsic
or investment value. The age, location
quality and state of the property all
play an important role in this. Ease-
ments that reduce the value, such as a
right of habitation, also affect the value
of a real estate property.
Pledging of retirement capital
(pillar 2 and pillar 3a) If retirement
capital is pledged as additional security
for financing owner-occupied housing,
the retirement benefits are unaffected, ubs.com/mortgage-glossary
35
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