Mortgage titles 

The mortgage title (in french, « Cédule hypothécaire ») is the official guarantee backing the loan. Mortgage titles are established by public notaries.

For exemple, if your mortgage provider agrees on a CHF 900k loan, you will need to provide a mortgage title worth of at least CHF 900k.

If you fail to respect the mortgage contract terms (for exemple, not paying the interest), your mortgage provider could request the selling of your property in order to recover the amount loaned. This process is done through the title.

Mortgage title « ranks »

Titles can have many « ranks » (not to be mistaken with the mortgage ranks, see Principal (or amortization)).

Let’s consider the following :

You buy a property, and obtain a loan of CHF 500k. You will then provide your mortgage provider with a title amount of CHF 500k, in 1st «rank». A few years later, you do some renovation work in the house, and request an extra CHF 200k loan, in order to finance it. You will need to provide your mortgage provider with another title amount of CHF 200k, in 2nd «rank». Later on, your children inherit the property, and again, would like to do some renovation work, thus requesting an extra CHF 150k loan. They will provide the mortgage provider with another title amount of CHF 150k, in 3rd «rank», etc.

Anticipating

When buying a property and establishing the title, it could make sense to anticipate future mortgage amount increases. You could, for exemple, form a title amount CHF 100k more than your loan amount. In that case, if you were to request a CHF 100k increase on your mortgage in the future, you wouldnt need to go through the process of a public notary, thus saving some costs.

In most cases, when acquiring a property, the selling price includes the existing mortgage title. This is a point that needs to be looked at, as a title of CHF 800k, for exemple, has a value of about CHF 6’000.- (depending on the state (canton)).