Direct or indirect amortisation: what difference for your budget and taxes?

The second mortgage must in principle be amortised down to about two thirds of the property value within 15 years. There are two methods.

Direct amortisation

You repay the debt to the bank. The debt falls, so interest does too, which reduces the corresponding tax deduction. It is simple, transparent and uses no financial product.

Indirect amortisation

You pay into a 3rd-pillar (3a) account or policy pledged to the bank. The debt stays unchanged: you deduct interest and your 3a contributions (up to the annual ceiling). At maturity, the capital repays the debt.

How to choose?

• Indirect gives a tax advantage, but your debt (and rate exposure) stays high for longer;
• the 3a capital is itself taxed on withdrawal, at a reduced rate;
• the return on the account or policy counts in the calculation.

The right choice depends on your canton, your marginal tax rate and your horizon. We simulate it with you.

General information; not personalised tax advice.