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Old 12.07.2015, 13:07
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Buying a new property before selling existing

I couldn't find a thread on this topic so apologies if this has already been hashed out.
I know its easy enough to ask a bank but better to educate yourself before disclosing your life story. Thanks in advance.


We currently own a property and are looking at upgrading/buying another larger one. Actually we have found one but their are questions around finance as we have a lot of our equity tied up in our current property.


The intention is to sell our existing place to help finance/renovate the new place. Finance is not a problem (75%) "IF" we sell our existing place.
However this may take some months (or longer) so I'm curious as to how the banks calculate their lending criteria for customers who have existing properties.
Lets say we have 500k equity in our existing place with a potential rental income of 3500-4000CHF/month. Do they calculate one or both of these figures when determining whether they can finance a 2nd property?


Rental income on the 2nd property would be a lot more than our primary property so if the bank does calculate rental income would they use the property giving the highest return?
Do they take into consideration the intention to sell an existing property?
Of note is that we have a deposit of 45-50% for the 2nd property and we are C Permit holders.


Thanks again
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Old 12.07.2015, 15:19
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Re: Buying a new property before selling existing

Only your bank can tell you but with a slow moving housing market (have no idea if that is also the case in Montreux) and no rental income yet, I doubt whether the bank will take that into consideration.
But, as you said you have 45-50% of the cash needed available, why bother?
Or is your current place not yet paid off?

When we bought last year, the bank noted that we have another property (paid off) but did not take that into consideration, it did influence the interest rate though.
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Old 12.07.2015, 15:46
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Re: Buying a new property before selling existing

When I had what we would call in the UK a bridging loan to buy a new house being built where we would move on completion and still live in our existing house, the bank simply issued another short-term mortgage at the same rate as our existing one...
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Old 12.07.2015, 21:03
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Re: Buying a new property before selling existing

No our current place is not paid off. We have 40% in our current place and a 60% mortgage.
The location is not Montreux (need to update my profile) its Zug.

One scenario I heard was that a single mortgage is calculated for both, the 3xinterest rate at 5% (+1%) is calculated for affordability minus the rental income from one? of the properties. I haven't confirmed this though.


I know its common to line up selling places with buying a new place. a Bankverprechung from the buyer is enough for the bank to consider an existing place as sold but not always possible to line things up.


Thanks again
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