Amortization plan for your mortgage: calculation, formula and meaning

An amortization plan is often presented as a simple table. In a Swiss mortgage, it is much more concrete: it shows when you repay part of your debt, how much interest you pay, what debt remains outstanding and what monthly effort your budget must absorb. It turns an abstract mortgage into a readable payment calendar.

For a property purchase, this document is useful even before signing an offer. It lets you compare a fixed-rate mortgage, a SARON solution, a combination of tranches, direct amortization or indirect amortization. It also shows whether the transaction remains sustainable after the excitement of the viewing, when bills, taxes and renovations take their place back in the living room.

Understanding the amortization plan in a Swiss mortgage

Simple definition: the calendar of your debt

The amortization plan is a repayment schedule that details, period by period, the split between interest, principal repayment and remaining balance. In a conventional loan, each line answers four questions: what debt exists at the start of the period, what interest is charged, what amount repays principal and what debt remains after payment.

In everyday language, some people refer to a loan amortization table. The expression is not very elegant, but it describes the need well: a line-by-line view. For a property purchase, the more precise term is mortgage amortization table, because a Swiss mortgage follows rules and practices that differ from a consumer loan.

Amortization plan definition: it is the document that turns a debt into dates, amounts and remaining balance. In a bank file, the loan amortization plan is mainly used to check that the planned repayment meets the requirements of the lender and your financial affordability.

Why a Swiss mortgage is not repaid like a small loan

In Switzerland, mortgage financing is often structured in several levels. The debt can reach up to around 80% of the value retained by the lender, depending on the file, the type of property and the equity. The portion exceeding roughly two thirds of the property value generally corresponds to the portion to be amortized first.

For several years, Swiss financial supervision has closely framed lending practices. The FINMA notes that the pledge and amortization requirements stemming from banking self-regulation are minimum standards that banks must observe. In practice, banks also analyse the specific risk of each segment: primary residence, investment property, borrower age, income stability and quality of the collateral.

How to calculate an amortization plan

The variables to gather before calculating

Before building an amortization plan, you need to gather a few data points. The first is the purchase price, for example CHF 850’000.–. The second is the value retained by the bank, which may be lower than the price if the institution considers the property too expensive. The third is the amount of equity. The fourth is the mortgage amount. The fifth is the selected amortization period.

The basic formulas to know

Pour un linear amortization, the basic formula is simple:

• Annual amortization = amount to amortize ÷ amortization period
• Annual interest = remaining debt × interest rate
• Annual payment = annual interest + annual amortization
• Final debt = initial debt − amortization paid

In a linear amortization plan, the repaid principal portion remains stable, while interest decreases gradually because the debt falls. The total payment therefore decreases slightly over time, unless the rate changes or the bank applies a different payment frequency.

For indirect amortization, the accounting formula changes: the mortgage debt does not decrease each month. The amortization amount is paid into a tied pension solution, generally a pillar 3a pledged to the lender. Interest therefore continues to be calculated on a higher debt, but pillar 3a contributions may provide a tax advantage depending on your situation.

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Example of an amortization plan in Switzerland

Starting assumption: purchase at CHF 850’000.–

Let us take a deliberately simple example. You buy an apartment in Switzerland for CHF 850’000.–. You contribute CHF 170’000.– in equity, i.e. 20%. The mortgage financing is therefore CHF 680’000.–. The bank requires the debt to be reduced to two thirds of the property value, i.e. around CHF 566’667.–.

The amount to amortize is therefore CHF 113’333.–. Over fifteen years, this represents approximately CHF 7’556.– per year, or CHF 630.– per month. The 2% rate used below is for illustration only; it is neither an offer nor an indication of an available rate.

This first example of an amortization plan shows linear direct amortization. The amounts are rounded for easier reading.

Year	Opening debt	Interest at 2%	Amortization	Average monthly payment	Closing debt
1	CHF 680’000.–	CHF 13’600.–	CHF 7’556.–	CHF 1’763.–	CHF 672’444.–
2	CHF 672’444.–	CHF 13’449.–	CHF 7’556.–	CHF 1’750.–	CHF 664’889.–
3	CHF 664’889.–	CHF 13’298.–	CHF 7’556.–	CHF 1’738.–	CHF 657’333.–
4	CHF 657’333.–	CHF 13’147.–	CHF 7’556.–	CHF 1’725.–	CHF 649’778.–
5	CHF 649’778.–	CHF 12’996.–	CHF 7’556.–	CHF 1’713.–	CHF 642’222.–
15	CHF 574’222.–	CHF 11’484.–	CHF 7’556.–	CHF 1’587.–	CHF 566’667.–

In this mortgage amortization table, the most important line is not necessarily the monthly payment. It is the closing debt. It determines your future position with the bank. If the debt remains too high, renewal may become less comfortable, especially if income falls or costs rise.

Monthly version: what you feel in your bank account

The annual table is easy to read, but your bank account lives month by month. In the example, CHF 7’556.– of annual amortization corresponds to about CHF 630.– per month. Add around CHF 1’133.– in monthly interest in the first year and you get an outflow close to CHF 1’763.–, excluding maintenance costs, insurance, taxes, PPE and renovations.

For a household, this detail matters. An offer that looks acceptable “per year” can feel unpleasant every 30 days. The amortization plan should therefore be reviewed in three formats: annually for the bank, monthly for the budget, and long-term for wealth planning.

Direct or indirect amortization: two mechanisms, two effects

Direct amortization: the debt decreases

Direct amortization means regularly repaying part of the mortgage. The debt decreases, future interest falls gradually and financial risk is reduced. It is the most intuitive method: you owe less, so you pay less interest, all else being equal.

It suits people who want to reduce their indebtedness, prepare for retirement or avoid being too dependent on future rates. Its main drawback is tax-related: if the debt falls, deductible interest also decreases under the tax system currently applicable until the housing ownership reform fully comes into force.

Indirect amortization: the debt remains, savings build up

Indirect amortization consists of paying the amortization amount into a pillar 3a pledged in favour of the bank. The mortgage debt remains stable over the planned period, while pension capital is built up separately. At maturity or according to the agreement, this capital is used to reduce the debt.

Currently, employees affiliated with a pension institution may contribute up to CHF 7’258.– per year to pillar 3a; self-employed persons without a 2nd pillar may contribute 20% of income, capped at CHF 36’288.–. This limit is interesting in our example: the required amortization of CHF 7’556.– slightly exceeds the 3a ceiling for a single employee. You must then check whether a direct supplement is required or whether two spouses can split the strategy.

This detail shows why an amortization plan must be personalised. On paper, indirect amortization looks neat. In the real file, 3a limits, age, canton, taxable income, bank fees and expected return may change the conclusion.

Comparing both without falling into the trap

A comparison table should show at least three lines: cash outflow, residual debt and estimated taxation. If you look only at interest, indirect amortization may seem attractive. If you look only at the debt, direct amortization appears more prudent. The right answer depends on your income, age, canton, risk tolerance and objectives.

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Tax effects and current legal status in Switzerland

Taxation influences the schedule

In Switzerland, taxation has long encouraged a nuanced reflection between debt, interest and amortization. Mortgage interest was linked to the deductibility of interest, while imputed rental value taxed owner-occupiers on a theoretical income. This mechanism has a direct effect on the amortization plan: repaying faster reduces interest, but can also reduce certain deductions.

Imputed rental value reform: what has been decided

Legal and political status as at 15 June 2026: on 28 September 2025, the Swiss people accepted the reform relating to the taxation of residential property. The Federal Council then set the entry into force of the abolition of imputed rental value taxation on 1 January 2029. This reform also changes the deduction of debt interest and maintenance costs, with specific rules, particularly for rented or leased properties and for first homes under the planned provisions.

Practical consequence: any amortization plan drawn up in 2026 for a period of 10 to 15 years must include two periods. The first corresponds to the current tax system. The second begins on 1 January 2029, when the reform will have material effects. A calculation frozen around a single tax logic may become wrong before even half the financing period has passed.

What tax effects change for an owner

An owner buying today should avoid two extremes. First extreme: choosing indirect amortization only because interest is deductible. Second extreme: amortizing as much as possible without keeping liquidity for maintenance, taxes, condominium charges or a drop in income. A good amortization plan seeks a balance between security, taxation and flexibility.

Pour an investor, the analysis is different again. A rented property remains linked to taxable rents, deductible charges and sometimes stricter banking rules. The schedule must then be compared with the net yield, the risk of vacancy and future works. An apartment that looks profitable in an advert may become less appealing after replacing the boiler, a condominium capital call and two months of vacancy.

Mistakes to avoid before signing your schedule

Confusing low rates with a comfortable budget

A frequent mistake is to judge the financing only by the current contractual rate. This is dangerous. An amortization plan must also answer the following question: what happens if the renewal takes place at a higher rate? The remaining debt at that point becomes decisive.

In our example, after five years, the debt still remains around CHF 642’222.–. If the rate rises, annual interest may increase sharply despite the amortization already paid. The amortization plan is therefore used to anticipate the renewal, not just get through the first year.

Forgetting non-bank costs

The mortgage payment is not the total cost of a home. You must add maintenance costs, condominium charges, insurance, taxes, renovations and sometimes heating or energy costs. A house does not read your schedule before deciding that a roof needs replacing.

For a primary residence, a liquidity reserve remains essential. Amortizing too quickly can weaken the household if every available franc goes into the debt. A good amortization plan should not turn an owner into the guardian of a magnificent property but an anaemic current account.

Comparing bank offers that do not speak the same language

Two offers may show a similar monthly cost while hiding important differences: interest periodicity, amortization requirement, application fees, margin at renewal, pillar 3a constraints, tranche release date, exit penalty. The bank amortization plan must therefore be read in its contractual context.

This is one reason to work with a mortgage broker. They can request comparable offers, isolate hidden costs, explain clauses and negotiate with several lenders. You save time, but above all you avoid choosing the offer that is cheapest in one column and most expensive in real life.

Working with a mortgage broker

The steps in a well-prepared application

An effective file starts with a complete snapshot of your financial situation: income, equity, pension assets, existing debts, taxation, family situation, holding horizon and type of property. Then the broker builds several amortization plan scenarios: direct, indirect, mixed, faster amortization, minimum amortization, different rate tranches.

Each scenario must answer a precise question. What monthly payment today? What debt in five years? What debt at retirement? What margin if income falls? What portion can be covered by pillar 3a? Which bank accepts this structure? This method turns a vague discussion into a measurable decision.

A good schedule should be negotiable

The amortization plan is not always fixed. Some banks accept a monthly, quarterly or annual rhythm. Others require minimum direct amortization. Some value pillar 3a more favourably. Others are more open to self-employed borrowers, recurring bonuses or rental income. The same file can receive different answers depending on the lending institution.

Your interest is therefore not to limit yourself to your usual bank. It knows your account, but it does not necessarily know the best market offer for your profile. A mortgage broker puts lenders in competition and clarifies the real conditions, without making rate promises. The serious promise is the method.

FAQ about the amortization plan

Remember: your schedule should serve your project, not just reassure the bank

A well-built amortization plan does more than meet a bank requirement. It shows how your debt evolves, how your payments are split, what margin you keep and what choices remain open. In a Swiss mortgage loan, this visibility is worth as much as the displayed rate.

Are you preparing a purchase or mortgage renewal in Switzerland? Request an assessment of your borrowing capacity and a personalized calculation of your schedule. An expert can turn your property project into a coherent, readable financing plan that can be defended with banks.

Disclaimer: this article is for information purposes only and does not constitute tax advice, a credit offer or a promise of bank approval. The exact rules depend on the canton, lender, type of property, your income, assets, age and tax situation. A personalized analysis remains necessary before any financing decision.

• FINMA, communication on risks in the real estate and mortgage markets, as well as recognition of minimum banking self-regulation standards.
• Federal Council / FDF, entry into force of the reform of residential property taxation.
• ch.ch, information on the 3rd pillar and pillar 3a contribution limits.