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Old 26.02.2012, 19:47
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Two mortgages simultaneously

Hello, I hope someone can answer me ...

In my search to buy a house in Zurich, I came across 2 houses and liked them both. However based on my income, I can avail of a mortgage on any one house but not both. As a way out, I was thinking that if I could approach two different banks to avail of a mortgage for the 2 houses, it would be ideal for me. I know I can pay them both, but banks being understandably conservative, will not be convinced.

Is it a law in Switzerland to reveal to the bank if you plan more loans simultaneously? Does the contract with the bank have any such clause. If not, then are they within their rights to cancel my mortgage later when they find about the multiple mortgages ?

Any guidance as to the DO's and DON'ts would be highly helpful.
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Old 26.02.2012, 19:53
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Re: 2 mortgages simultaneously

I dont know about related laws or neither have I taken two mortgages. My mother always recommended me to keep credit as low as possible. However, each has to decide for his or her own. wish you the best of luck in your house search and affiliated process.
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Old 26.02.2012, 20:11
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Re: 2 mortgages simultaneously

So presumably you can also afford the 15-20% deposit that you will be required to pay on each home!!

Would be nice to have that much money
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Old 26.02.2012, 20:22
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Re: 2 mortgages simultaneously

As far as I know (at least there certainly used to be), there is central credit registry where loans are registered. Could be that the bank, while checking you out, comes across the other loan and takes a dim view of you trying to pull the wool over their eyes. They may even ask you in your mortgage application whether you have other loans...would you lie to them? Perhaps not a wise strategy...

Anyway, just how many houses can you live in at once? Unless of course you are like a Saudi colleague of mine who had a house for each wife....
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Old 26.02.2012, 20:47
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Re: 2 mortgages simultaneously

You will be asked to declare both in the application. At the point of signing, you make a declaration that the information that you have given is valid and correct so if you don't declare it, you have problems. I don't think that there is a clause stating that you have no other loans, but there is one which certifies that the information you gave is true.

If you will live in one and rent the other (or else, why would you buy two in the same place!), maybe you can get a business mortgage in which you will demonstrate that the rental income will be enough to pay off the mortgage. However, you will pay higher interest rates and probably have different tax treatment.

In terms of cancelling the mortgage, I'm not sure - but it may be difficult to service both loans whilst you are banged up for fraud
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Old 26.02.2012, 21:50
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Re: 2 mortgages simultaneously

Any lender will want to verify your income and expenses. Deliberately lying (or withholding pertinent information, which is about the same thing) can lead to your loan application being treated as attempted fraud. That cannot end well.

Whether or not this is financially optimal is another discussion; legally, you best stay away from even thinking about this strategy...
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Old 26.02.2012, 21:50
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Re: 2 mortgages simultaneously

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Hello, I hope someone can answer me ...

In my search to buy a house in Zurich, I came across 2 houses and liked them both. However based on my income, I can avail of a mortgage on any one house but not both. As a way out, I was thinking that if I could approach two different banks to avail of a mortgage for the 2 houses, it would be ideal for me. I know I can pay them both, but banks being understandably conservative, will not be convinced.

Is it a law in Switzerland to reveal to the bank if you plan more loans simultaneously? Does the contract with the bank have any such clause. If not, then are they within their rights to cancel my mortgage later when they find about the multiple mortgages ?

Any guidance as to the DO's and DON'ts would be highly helpful.

DON'T be stupid. DON'T try to out-smart the banks.
They will find out, as pointed out.
Decide for the one house which you like most. And try to buy that (provided nobody else is interested and out-bids you...)
If it's been on the market for some time, you are most probably overpaying anyway (most if not all) stuff seen on homegate etc. is overpriced.

And if you think, it's a good investment: think again. Most probably it isn't.
You can only live in one house anyway - so you are certainly not going to get a favorable financing on both, no chance.

You can, of course, put down a reserve on multiple properties at the same time, which securing the loan for any of the two - the banks will happily do that and calculate your rates etc. for both. But unless you can afford the downpayment and the mortgage calculated at 5% interest rate for both, no sane bank will come forward with an offer.

Sheesh. Why is that people always (I'm generalizing here) try to be "smarter" than "the system"?
True, I'm a wimp and a coward - but when it comes to buying a house and you're looking at 500k++ of mortgage, is it too much to ask that people act responsibly and sane?
The restrictions put in place in this country for getting a mortgage are low enough already - and they were set for very good reasons.
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Old 26.02.2012, 22:47
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Re: Two mortgages simultaneously

I know that the credit scoring here tells you how much in debt you are, so if there is a lag between the two mortgages going though the bank will most certainly find out that you have taken out another mortgage and the amount.

In the UK the credit application itself is marked on your credit report and I would expect it to be similar here, since it is an increased risk.

I was asked to provide all the financial information and actual bank statements and mortgage statements when we put in the mortgage application here in Switzerland.
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Old 26.02.2012, 23:06
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Re: Two mortgages simultaneously

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In my search to buy a house in Zurich, I came across 2 houses and liked them both. However based on my income, I can avail of a mortgage on any one house but not both. ....

I know I can pay them both, but banks being understandably conservative, will not be convinced.

Is it a law in Switzerland to reveal to the bank if you plan more loans simultaneously?
Money laundering?
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Old 27.02.2012, 08:27
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Re: Two mortgages simultaneously

If it really means a Fraud is being committed, I might as well stay away from it.
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Old 27.02.2012, 08:32
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Re: Two mortgages simultaneously

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If it really means a Fraud is being committed, I might as well stay away from it.
There was a huge amount of Fraud in the UK wit celf cert mortgages, people claimed they earned far more than they did. I guess te shit will hit the fan when some of those properties get reposessed in the next 5 years.

If you have a big enough deposit then the banks will give you a commercial mortgage,
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Old 27.02.2012, 10:17
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Re: Two mortgages simultaneously

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If it really means a Fraud is being committed, I might as well stay away from it.
You can buy as many houses as you want if you have the means as well as the rights (there are restrictions on foreigners buying property) to do so. However you need to declare to the bank what you're doing as the first house will presumeably be your primary residence which will have one rate of interest whereas the others will have a higher rate because of the risk of default etc.

Now, why anyone would commit so much capital to houses might raise a few suspicious flags but it depends who you are and what you do. All the bank will look at is the affordability. If you're crazy enough to want to pay interest on two houses and keep one empty (as you havent mentioned it will be rented out, which incidently would make it a buy to let) then go ahead, the bank probably doesn't care.
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Old 27.02.2012, 10:25
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Re: Two mortgages simultaneously

My father had a useful expression for this sort of situation:- If it was a good idea, everyone would do it....
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Old 27.02.2012, 11:07
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Re: 2 mortgages simultaneously

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So presumably you can also afford the 15-20% deposit that you will be required to pay on each home!!

Would be nice to have that much money
With only 15% one might find it difficult to get accepted.. 20 - 25+ is your winner
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Old 27.02.2012, 11:24
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Re: 2 mortgages simultaneously

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With only 15% one might find it difficult to get accepted.. 20 - 25+ is your winner
Or even 40% which is often asked for for mortgages on second properties, commercial properties or holiday homes.
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Old 27.02.2012, 11:37
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Re: Two mortgages simultaneously

I actually bought a house here recently.

During the meeting where you sign the contract, you will be asked for an irrevocable letter of credit from the bank. This is a document that promises the required amount will be paid to the seller.

The money in the account (your deposit and the bank's financing) is blocked off by the bank for the purpose, and will be sent on the handover date.

In addition, there is a mortgage letter in the contract, and it is assigned to a specific bank. If the bank is not in the contract, they will need a transfer arranged with the holding bank. (In my case, the seller's letter was at my bank.)

If you attempt to get two mortgages at the same time, you will be found out and you will have an explanation problem.
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Old 27.02.2012, 12:03
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Re: Two mortgages simultaneously

It is just commensense. If your income is insufficient to pay for 2 mortgages why expose yourself to financial difficulties. Laws are meant for the safety of the people, why try and find ways to bend these specially to evade others (banks) from factual financial information about yourself.
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Old 27.02.2012, 12:07
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Re: Two mortgages simultaneously

I wouldn't recommend buying one house in Switzerland, have you looked at the historical returns? Have you calculated the buying and selling costs? have you calculated that your house might be empty for 12 months while you try and sell it?

You would be much better off buying shares in Swatch. (that was my 1,000 th post)

Last edited by Sbrinz; 27.02.2012 at 14:50.
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Old 27.02.2012, 12:17
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Re: Two mortgages simultaneously

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You would be much better off buying shares in Swatch.
Or just giving the money directly to me
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Old 27.02.2012, 12:43
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Re: Two mortgages simultaneously

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I wouldn't recommend buying one house in Switzerland, have you looked at the historical returns? Have you calculated the buying and selling costs? have you calculated that your house might be empty for 12 months while you try and sell it?

You would be much better off buying shares in Swatch.
Indeed, don't get fooled like the majority of buyers by the current record-low interest rates. Will it still make sense once these grow back to normal, e.g. 3.5% to 4.5% for 5y?
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