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Old 05.03.2017, 08:46
ivank ivank is offline
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Re: Loans in CH: Interest payments

Banks here don't really expect you to repay the loan. You can have a perpertual mortgage of 65% of house's value and pay just the interest on it, which is really really low these days, one of the cheapest sources of money out here. And it's tax deductible, swiss tax system really encourages debt. Only if you loan more than 65%, banks would expect to see some repayment for their own safety: you have to get back to 65% linearly within 15 years, i.e. amortize 1% per year if you loaned the maximum possible 80%.

A big difference is that swiss (and many european) mortgages are full recourse: you're liable for the debt with all your current and future wealth. Unlike US where they'd just take the house and off you go. Also it's hardly possible to go underwater: if house prices start drop, banks will talk to you and ask for cash or house well before they're in any real danger of loss.

Quote:
The (fixed rate) loans here are given for 10 years, not for 30 years like in the US
Fixed mortgages are really fixed here and any deviation from the contract will usually cost you quite a lot. You can't pay it pay off early whenever you want, you can't get off early without a big penalty. Are you really sure you'll be living in the same house for 30+ years?

Quote:
I know there is this Eigenmietwert that one has to pay (any other taxes?)
It's a tax, yes. Most countries tax properties in one way or another. Eigenmietwert is the local equivalent. It has nothing to do with the mortgage however.
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