How much do I have to amortise?

Everything above two thirds of the lending value. At 80 % loan-to-value that is a good 13 % of the purchase price, which must be gone within 15 years or by retirement, whichever comes first. On a purchase price of one million, around CHF 133'000, so about CHF 9'000 a year.

Why is indirect amortisation often cheaper?

Because it combines two deductions: the pillar 3a contribution lowers your taxable income, and because the mortgage debt stays the same, the deductible mortgage interest stays fully intact too. With direct amortisation, debt and interest deduction shrink year after year.

Does the first mortgage have to be amortised too?

No. The first two thirds of the lending value may stand; many owners leave them in place for life. Whether voluntary repayment makes sense depends on the interest rate, your tax situation and the alternatives for your money.

What happens to the 3a account in the end?

The balance pledged to the bank is withdrawn at retirement at the latest and paid into the mortgage; the withdrawal is taxed separately at a reduced rate. Until then it remains your retirement savings; it only serves the bank as security.

Huusfink Guide25 August 2026

Amortisation: repay directly or indirectly via pillar 3a?

Amortising means paying back the mortgage, and for the second mortgage it is compulsory. How you pay it back, though, is your choice, and over the years it makes a five-figure difference in tax.

What is compulsory and what isn't

Banks mentally split your mortgage in two. The first mortgage reaches up to two thirds of the lending value and may remain in place. Everything above that, up to a maximum of 80 %, is the second mortgage, and it must be paid off within 15 years or by retirement. Buy with 20 % equity and you amortise a good 13 % of the purchase price: on CHF 1'000'000 around CHF 133'000, roughly CHF 9'000 a year or CHF 750 a month.

Direct: debt down, deduction down

With direct amortisation you repay the bank part of the debt every year. Your interest costs fall steadily; your wealth sits increasingly in the house. The flip side shows up in your tax return: as the debt shrinks, so does the mortgage interest deduction, and the money is locked in. Direct suits anyone who wants to be debt-free and already uses pillar 3a to the full elsewhere.

Indirect: via pillar 3a

With indirect amortisation, the mortgage stays unchanged. Instead you pay the amortisation amount into a pillar 3a account or 3a policy and pledge the balance to the bank. Repayment happens later in large steps or at retirement. The effect: the 3a contribution is deductible from taxable income, the full mortgage interest deduction remains, and the balance earns a return inside your retirement savings. The annual 3a maximum for employees is a good CHF 7'000; if that doesn't cover the amortisation obligation, the rest is amortised directly or the partner's second account is used.

Which route pays off for whom

→High taxable income: indirect, the double deduction works hardest.
→3a not yet maxed out: indirect, you fill your retirement savings and your amortisation obligation with the same franc.
→Debt weighs on your mind: direct, the psychological value of a shrinking mortgage is real.
→Uncertain income: indirect is more negotiable, 3a contributions are easier to adjust in lean years than fixed amortisation instalments.

Taxes are the lever, not the whole decision: run both options with your marginal tax rate, or have the bank set them out for you, before you sign. And whichever route you take: amortisation is wealth building, not lost money, which is why it doesn't count as a cost item in the rent-versus-buy comparison.

Frequently asked questions

The buying check works out interest, amortisation and maintenance for a specific property, the way the bank checks it.

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