A mortgage is a loan in which the property itself serves as collateral. If the borrower stops repaying, the lender can force a sale to recover the outstanding balance. In Switzerland, Germany, France and Italy, mortgages typically have terms of 10 to 30 years.
Two pricing models dominate: fixed-rate mortgages lock in the interest rate for an agreed period (commonly 5–25 years), and variable-rate mortgages track a reference index such as Saron, Euribor or a national base rate. Banks usually require 10–20% equity (the down payment) and limit total housing cost to roughly one third of gross income.
Beyond interest, total cost includes mandatory home insurance, property taxes and, in Switzerland, imputed rental value tax (Eigenmietwert). Comparing mortgages on the basis of APR rather than headline rate gives a much better picture of the true cost.
Monthly payment = L × r / (1 − (1 + r)^−n) where L = loan amount, r = monthly rate, n = number of months
A CHF 800,000 mortgage at 2.5% nominal over 25 years has a monthly payment of about CHF 3,590 and total interest of roughly CHF 277,000 over the life of the loan.