Home ownership · Module 7

Paying off the
mortgage – how?

Amortize directly or indirectly? The tax difference is huge.

⌂
Amortize smartly
Two ways

Direct or indirect

Indirect

Mortgage stays high – full interest and 3a deduction. The 3a balance grows.

Direct

Debt shrinks – but you lose deductions and pay more tax.

TaxesReturnFlexibility
Why indirect

The double tax benefit

Interestfully deductible, mortgage stays high
3a deductionthe payment lowers income
Tax-freethe 3a balance grows tax-free
The process

How it works

Pay into 3apledged to the bank
→
Let it growover the years, tax-free
→
Redeemclear the mortgage at the end

The mortgage deliberately stays high until then.

Not always optimal

When direct makes sense

Return < interestthen amortizing already pays
From 2029interest deduction heavily restricted – exceptions e.g. for rented properties and first-time buyers
Individualyour situation counts
Good to know

Which way for you?

💡 First step: Direct or indirect – the right choice hangs on your income, your goals and your tax situation. It's worth calculating.
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This video is no substitute for personal advice.
Baeriswyl Beratungen GmbH · Finance & pension planning · Fribourg

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