Repayment of the mortgage
The regular repayment of a portion of the mortgage over a defined period is called amortization. Typically, you must repay the second mortgage within 15 years or by the time you reach retirement age, whichever comes first.
Direct Amortization
With direct amortization, the debt is reduced regularly – usually quarterly – by a fixed amount. This reduces the principal balance and the interest burden.
Indirect Amortization
With indirect amortization, the debt remains unchanged. As a homeowner, you pay the repayment amount into a 3a pension plan, for example, which is pledged to the bank as collateral. This way, you build up retirement savings. At the latest upon retirement, the capital is paid out, and the mortgage is repaid by this amount.
Choosing the right mortgage
To ensure you can enjoy your home ownership in the long term without worry, the right combination of short- and long-term mortgages is crucial. You can choose between:
Fixed-rate mortgage: With a fixed-rate mortgage, the interest rate remains the same for the entire term. This gives you planning security and protects you from rising interest rates. However, you do not benefit from any interest rate reductions.
LIBOR mortgage: With a LIBOR mortgage, you must expect interest rate fluctuations and benefit when interest rates are low or falling. Compared to a fixed-rate mortgage, the interest rate with a LIBOR mortgage is generally lower.
In a personal consultation, we will work with you to create your customized mortgage combination, and we will provide you with offers with attractive mortgage rates.
