The mortgage certificate in Switzerland: everything you need to know
- What is a mortgage certificate?
- How does a mortgage certificate work?
- Who issues the mortgage certificate?
- Mortgage certificate, property pledge or mortgage: what are the differences?
- How to obtain a mortgage certificate?
- How much does a mortgage certificate cost?
- Mortgage certificate: what you need to know according to your canton
- What are your rights and obligations?
- What happens at the end of the loan?
- What fiscal aspects should you know?
- Frequently asked questions about the mortgage certificate
The mortgage certificate is a word that often comes up when talking about real estate financing in Switzerland. But do you really know what it is? What is it for? And why is it so common in mortgage loans? Let’s clarify in this article.
What is a mortgage certificate?
You are buying a property in Switzerland and someone talks to you about a “mortgage certificate”? This term may seem technical, but it is essential to understand it to secure your purchase and your financing.
The mortgage certificate is an official document representing a claim secured by a real estate property. In other words, it is a kind of “debt passport” linked to your house or apartment, which the bank can enforce if you do not repay your loan.
In Switzerland, it is the most commonly used security instrument to obtain a mortgage. It can be issued in paper or electronic form and is registered in the Land Register.
Concrete example:
You want to buy a house worth 900,000 francs. Your bank grants you a loan of 600,000 francs. To protect itself, it requests the creation of a mortgage certificate for 600,000 francs. If you don’t repay, it can sell the property to recover that amount.
How does a mortgage certificate work?
The certificate indicates the secured amount, the name of the creditor, and the identity of the debtor. It can be a registered certificate (in the name of the bank) or bearer certificate (transferable without formalities). It gives the creditor a right to pursue the property if the loan is not repaid.
Example of development:
Ten years after buying your home, you want to carry out renovations worth 50,000 francs. Your house has appreciated in value. You can ask the bank to “reopen” the certificate to increase the secured amount, without starting from scratch.
Who issues the mortgage certificate?
The mortgage certificate is issued by a notary, at the request of the borrower and the lending institution (the bank). Here is the process in brief:
- The bank requests the establishment of a security to grant the loan
- The notary drafts the mortgage certificate deed according to the loan conditions
- The deed is then registered in the Land Register of the canton where the property is located
Once registered, the certificate can be handed over to the bank (in paper or electronic form), which becomes the holder of the secured claim.
In Switzerland, only a competent authority such as the land register, via a notary, can officially establish a mortgage certificate. The involvement of a notary is therefore essential.
Example:
You borrow 500,000 francs to buy an apartment in Geneva. The bank sends instructions to the notary. The notary prepares the mortgage deed, has the parties sign it, registers it in the land register, then hands over the original to the bank. You pay the notary fees, which amount to about 1,500 to 2,500 francs depending on the canton.
Mortgage certificate, property pledge or mortgage: what are the differences?
- The mortgage certificate is a negotiable instrument: it can be assigned to another creditor (for example, if you change banks)
- The legal mortgage is a simple registration in the register, non-transferable. It does not give rise to a negotiable title
- The property pledge is rarer in Switzerland; it is based solely on the value of the property, without a title
In summary, the certificate offers more flexibility and legal security for banks, hence its popularity.
How to obtain a mortgage certificate?
Here are the main steps
- Mortgage loan application with a bank or a mortgage broker
- Property valuation to set the collateral value
- Creation of the certificate by a notary, who drafts the deed and has it registered in the land register
- Handing over the certificate to the bank, which becomes the official creditor
How much does a mortgage certificate cost?
The cost of a mortgage certificate mainly depends on three factors:
- the notary fees
- the land registry fees
- and the amount secured by the certificate
In general, total fees amount to between 0.2% and 0.4% of the certificate amount. These fees are borne by the buyer (the borrower).
Example for a mortgage loan of 600,000 francs:
- 0.2% represents CHF 1,200
- 0.4% represents CHF 2,400
These amounts include the drafting of the deed by the notary and its official registration in the land register of the relevant canton.
Mortgage certificate: what you need to know according to your canton
The procedures and fees related to a mortgage certificate can vary from one canton to another.
Here is some useful information according to your region:
- Vaud mortgage certificate: the canton applies its own notary and registration fees, generally between 0.2% and 0.4% of the secured amount
- Bern mortgage certificate: beware of the fixed fees of the Bern land registry. Remember to compare costs according to municipalities
- Jura mortgage certificate: in this canton, notary fees are often lower than elsewhere, which can make the operation more advantageous
- Fribourg mortgage certificate: the procedure is tightly regulated, and the notary plays a central role. It is recommended to request a prior estimate
- Geneva mortgage certificate: fees here are among the highest in French-speaking Switzerland. It is essential to carefully anticipate the overall budget
What are your rights and obligations?
As an owner, you retain the enjoyment of the property. But if you do not repay your loan, the bank can enforce the certificate to obtain repayment through a forced sale of the property.
On the other hand, the certificate also allows you to:
- Negotiate more easily with other banks (it is reusable)
- Obtain a better mortgage rate, because the guarantee is solid
- Simplify refinancing in case of loan buyback
What happens at the end of the loan?
Three main options are available to you:
- Keep the certificate, in case you need another loan later
- Transfer the certificate to another bank if you change institutions
- Have the certificate canceled from the land register, if you no longer want any commitment
Note: cancellation also costs money (notary fees, etc.). Many owners therefore choose to keep it.
What tax aspects should you know?
In Switzerland, the mortgage certificate has no direct tax impact. However:
- Mortgage interest is deductible from your taxable income
- The value of the property is declared in the taxable assets, which affects your tax level
Don’t worry: your bank or tax advisor will guide you according to your canton.
Frequently asked questions about the mortgage certificate
What are the advantages of the mortgage certificate?
The mortgage certificate is a flexible and reusable tool. It allows you to secure a mortgage loan simply, while also offering the possibility to easily change banks, refinance your property, or reuse the same guarantee for a new loan (for example, in case of renovations). It also avoids additional fees if it is kept and used again, instead of being canceled and then recreated.
Is it mandatory to have a certificate for a mortgage loan?
Yes, in most cases in Switzerland, banks require a certificate to grant a loan.
Can a certificate be transferred to another bank?
Yes. This is even one of the great advantages of this system: the certificate is easily reusable.
Is the mortgage certificate risky?
Not if you repay your loan properly. In case of default, however, the bank can resell your property to recover its funds.
Can I use an existing certificate for a new loan?
Yes, if the secured amount is sufficient, the same certificate can be used for new financing.
Do you need a loan for your property purchase?
Understanding the mortgage certificate is an important step, but you still need to find the right loan at the right rate. Our experts are here to support you, compare market offers, and propose the financing solution best suited to your situation.
Contact us now to benefit from personalized advice and obtain the best conditions for your mortgage loan in Switzerland.
