According to Article 842 of the Swiss Civil Code, the mortgage certificate is "a personal debt secured by a real estate guarantee". It assures the creditor (the credit provider) that the debtor will pay back both the loan and any interest due. Without it, the creditor may recover the amount of the mortgage by putting the property in question up for auction.
The mortgage certificate is provided in the form of a document prepared by a solicitor. This is a "security" detailing the amount that the creditor can claim from the debtor, as well as the real estate that serves as a guarantee. It can exist in two forms: paper and digital. The digital form, which has been available since 2012, makes it possible to register the certificate with the Land Registry and prevent the important document from being lost or destroyed in its physical form. Note that the digital version is only nominal in nature, whereas the paper version can serve as a tangible security to the bearer.
The mortgage certificate stays in the possession of the credit provider until the debtor has paid back the amount in full. It can then be reused for renovation work or further purchases, a highly advantageous move considering the costs required to prepare such a document (namely stamp duties, Land Registry fees, solicitors' fees and VAT), which usually amount to around 2% of a mortgage’s whole amount. In a real estate purchase, the holder of a mortgage certificate may transfer it free of charge or sell it back to the buyer.
If you have any questions about mortgage certificates, please feel free to contact our team, who will be more than happy to help you.
