The indirect pay off of a mortgage debt thanks to life insurance !

The indirect pay-off of a mortgage debt is an interesting alternative to direct pay-off, commonly used to pay-off mortgage debt as other kinds of debts.

The main difference between those two systems is the evolution of the debt. In case of direct pay-off, it decreases gradually, whereas it is refunded all at once with the indirect pay-off system.

First of all, let’s specify the following fiscal characteristics of a debt: the interests can be deduced from the taxable income and the amount left to pay is deduced from the taxable assets.

Moreover, the indirect pay-off method is carried out through a life insurance. Therefore, there is no refunding throughout the insurance cover period and the debt as the interests remain unchanged. The related tax deductions remain stable too. Moreover, if the life insurance contract has been signed as a dependant contingency contract, the benefits are also deductible from the taxable income.

The deductible benefits every year were limited to CHF 6365.- for members of a 2^nd category contingency institution and to 20% of the income, but up to CHF 31824.- for others.

But still !