Sponsored Content The big mortgage guide
The account balance looks good. The property you want is available. But many questions arise before buying a home. Here are the 20 most important answers.
46 percent of Swiss people dream of owning their own home. In other words, almost every second adult. According to a ZHAW study, however, they believe they don't have enough money to do so. Anyone who takes a detailed look at financing may see that the dream of home ownership could come true. In view of the high savings rate in Switzerland, this may actually become a reality for some. Depending on the interest rate situation, the housing costs of a mortgage can be lower than the rental costs of a comparable apartment. Here is a step-by-step guide to the minimum financial requirements for home ownership.
How much equity do I need to buy a home?
As a rule, 20 percent of the purchase price must come from your own funds. Depending on the situation, up to 40 percent equity is required to finance a vacation home. In addition, no funds from the tied pension provision (2nd or 3rd pillar) can be used for the latter.
What own funds can I contribute?
Savings, money from the 2nd (pension fund) and 3rd pillar, gifts or inheritances are classic. Important: At least 10 percent must come from "real" equity - i.e. not from the pension fund.
What role does my income play in the financing?
The bank uses the affordability calculation to check whether the buyer's cumulative income is sufficient to cover the running costs of a property.
How much house or apartment can I afford?
As a rule of thumb, the annual housing costs (interest, amortization, ancillary costs) should not exceed one third of your gross income.
Up to what amount will the bank finance the purchase price?
In principle, 80 percent of the purchase price is financed by the bank. Buyers must raise the remaining amount themselves.
Can I also buy a home if I am self-employed, employed part-time or retired?
Yes, this is possible. Depending on the initial situation, banks often require additional proof, equity or collateral.
What does "affordability" mean and how does the bank calculate it?
Affordability shows whether buyers can afford the property in the long term. The bank calculates this on the basis of an imputed interest rate that is significantly higher than current interest rates, plus amortization and ancillary costs. All of this together should not exceed around a third of gross income.
Example calculation:
Purchase price: CHF 1,000,000
Equity capital: CHF 200,000
Mortgage: CHF 800,000
Imputed interest (5 %): CHF 40,000
Amortization: CHF 10,000
Service charges (1 %): CHF 10,000
Total costs per year: CHF 60,000
→ For this you need a gross income of CHF 180,000 per year.
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What is included in the purchase price and what additional ancillary purchase costs do I need to factor in?
Around 3 to 5 percent is added to the purchase price for ancillary costs. These include notary fees, entry in the land register and the transfer tax, which is levied in Switzerland when a property is purchased. These costs are regulated at cantonal level and vary greatly.
How high will the costs for maintenance and operation be?
Maintenance, repairs and operating costs are calculated at around 1 percent of the purchase price. This can be higher for older properties.
What mortgage models are available?
Fixed-rate mortgage: At a fixed interest rate and with a fixed term. Secure planning thanks to calculable costs. However, you cannot continue to benefit from falling interest rates after taking out the mortgage. Early termination may be subject to an early repayment penalty.
Saron mortgage: Variable interest rate that is constantly geared to the market. You can benefit from falling interest rates, but must also be able to withstand rising interest rates. During the term, the Saron mortgage can be converted into a fixed-rate mortgage.
Combination of Saron and fixed-rate mortgage: The two products can also be combined according to individual requirements.
What is the practical procedure for taking out a mortgage?
After the initial meeting to make a financing inquiry and a non-binding offer, a binding offer with a financing solution is made once the relevant documents have been submitted (see below for a detailed list). After a comparison, a commitment is made and the contract is signed. No matter at which point: The experts are available to advise you.
What terms make sense?
That depends on your personal planning and individual needs.
Difference between 1st and 2nd mortgage:
The 1st mortgage covers around two thirds of the purchase price and usually remains in place. The 2nd mortgage covers up to 80 percent of the purchase price and must be repaid (amortized) within 15 years or by retirement age.
Are there minimum amounts or minimum terms for mortgages?
Yes, each bank determines this itself. Mortgages often start at CHF 100,000 and have a minimum term of 2 years.
By when must the debt be repaid?
In principle, the second mortgage must be repaid within 15 years or by retirement age.
Is there an age limit for mortgage customers or what happens when I retire?
There is no age limit. However, income generally falls when you retire. Banks then have to check what mortgage amount is possible. In principle, this may not exceed two thirds of the property value.
What does amortization mean?
Amortization is the gradual repayment of a mortgage. The amount owed is reduced in regular installments over a certain period of time.
What are the differences between direct and indirect amortization?
Direct: With direct repayment, the mortgage debt is reduced. However, this also reduces the deductible interest on the debt for tax purposes. With indirect amortization, you pay into pillar 3a, which serves as collateral for the bank. The mortgage initially remains the same amount and is only reduced when the pillar 3a is paid out.
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Documents for a financing request (self-employed)
- Current extract from the debt enforcement register
- Current salary statement or receipts for pension payments
- Copy of the last tax return incl. contribution sheets
- Current pension fund statement
- Proof of own funds (3rd pillar, gifts, inheritance withdrawals)
- Proof of identity (ID or passport)
- Detailed documentation on the purchase property, with purchase price or market value estimate, construction plans or building description, extract from the land register, possibly building insurance policy
Depending on the bank, further documents may also be requested. The bank can provide assistance in compiling the documents.
How does home ownership affect my taxes?
- The tax value of the property is calculated according to the respective cantonal regulations. It is usually 60 to 90 percent of the market value and is included in the assets.
- Debt interest deduction: You can deduct your mortgage interest.
- Amortization: With indirect amortization via pillar 3a, you save additional taxes as the payments are deductible from your income.
- Investments: Value-preserving investments can be claimed for tax purposes.
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