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  #41  
Old 19.07.2011, 22:21
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Re: Buying a house, getting the 20%

Aargau is great value, and the two local banks, if you find a great property, will lend up to 90%. If you take out a personal loan for the 10% deposit, 50k, that is OK too. The bank will want to know that you can cover the mortgage and the loan repayment. You can offset the interest on the 50k loan against tax too, just like the mortgage.

I think you are unlikely to get more than 80% on a new build. However, you might find a Multi family house in Lenzberg for 500k, and live yourself in the worst apartment, rent out the other, and renovate with the income.

You could try GE Money Bank for the deposit, Migrosbank, BEKB. Tell them what you want it for on the form.

One final thing, certain zones of the town are more acceptable for higher loans, presumably based on past default history. I always push the smaller bank for 90%, then ask them why not. They usually say something like: Normally it is 20% deposit, that area is good, we could perhaps go to 10% on a perfect house, but the house is not so cheap... If they stick at 20% I hear alarm bells.
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  #42  
Old 19.07.2011, 22:45
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Re: Buying a house, getting the 20%

Which two banks?

Names please!

Thanks.
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  #43  
Old 19.07.2011, 23:00
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Re: Buying a house, getting the 20%

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Firstly, I know the attraction of home ownership, both from a financial and emotional perspective, but a few points:

The OP wants to borrow money to make the down payment. You do realise you will have to declare that loan to the mortgage company, who I would expect would be then much less likely to approve a loan. Remember, there are laws here which impose a duty of care in making affordable loans. It's not so much about the company that fronts up the 10% or whatever, it's more about getting the mortgage approved after that fact.

The OP also states that his pension has been cashed in to start his own business and that he is trying to take the best part of 100k loan with no collateral, and a further 400k mortgage - and goes on to state that "My finances are financially stable"...hmmm.....

Rent is dead money - yes, so are interest payments. Of course, interest payments at the moment seem very attractive because of low rates, but it may not always be that way. I know you can fix the rates, but consider what you will do once the fixed term is up - will you be able to pay off a substantial amount of the capital, or will you be forced to take another similar sized loan, at maybe a much less advantageous rate. At least with rental, if your circumstances change downsizing is a relatively easy process - in an overheated housing market with rising interest rates, and especially one which is historically quite illiquid, it could be the ruin of you financially.
Do you need to have cash savings to be financially stable?????? I have a property in glasgow worth 100'000 which the mortgage is down to 50, I also have a business which has an asset value of 150'000.- and a yearly turnover of xxxx (dont want to advertise to the world

Just because i have decided to reinvest the extra money i have, does it make me financially instable?
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  #44  
Old 19.07.2011, 23:05
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Re: Buying a house, getting the 20%

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Do you need to have cash savings to be financially stable?????? I have a property in glasgow worth 100'000 which the mortgage is down to 50, I also have a business which has an asset value of 150'000.- and a yearly turnover of xxxx (dont want to advertise to the world

Just because i have decided to reinvest the extra money i have, does it make me financially instable?
the reason most people/companies go bust is when they get into cash flow problems. so yes a cash/liquid cushion is essential for financial stability, imo.

as far as getting a loan for the deposit, you probably won't get a loan, credit card, etc over a certain % over your income. I think it could be 40% (or 50 with credit cards? i can't remember). but take a look at how much % of income will be used to pay the debt.

anyway, you could try to get part of the loan on your glasgow home? that debt may not be counted in here.
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  #45  
Old 19.07.2011, 23:07
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Re: Buying a house, getting the 20%

Aargauer kantonal Bank and NEUE AARGAUER BANK AG whose website http://www.NABHome.ch, often has nicer properties for sale in Aargau than homegate.
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  #46  
Old 19.07.2011, 23:08
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Re: Buying a house, getting the 20%

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Well, I reckon you should do your calculations with the 5% scenario in view, i.e. can you still afford it if it's 5%. We got 2.95 for ten years out of UBS in May (wish we could have waited until the last minute but things kept going up and down then, so I seized a "down" day), now it's even lower, the problem is, of course, that the price for houses goes up conversely. And clearly people are prepared to pay crazy prices for both rent and purchase, I mean, 2800 for a flat in LENZBURG? When did that happen?
Lenzburg is an up and coming city which is full of building sites and new building. they have also started work on the train station which will be completed by 2013 with luxury high rise flats. Not all of the flats are so expensive but ours is a 2 floor 2010 built with castle view from the bedroom, living room and bathroom. Flats in lenzburg are few and far between at the moment so any new appartments are quickly tied up with tenants, hence the cost
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  #47  
Old 20.07.2011, 04:14
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Re: Buying a house, getting the 20%

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the reason most people/companies go bust is when they get into cash flow problems. so yes a cash/liquid cushion is essential for financial stability, imo.
...
anyway, you could try to get part of the loan on your glasgow home? that debt may not be counted in here.
I would avoid cross currency borrowing unless you specifically want to gamble FX. If UK interest rates go to 4%, the might go back over 2chf, the debt almost doubles in chf terms, in interest rate payment terms things quadruple!!!

I think you are better with lower outgoings, and quick reactions. It must be a unique house you can sell quickly. They always sell in a recession better than flats. Usually that means a unique older property, or something new with lots of building reserve left. You would want to stay variable on the Swiss mortgage, otherwise the penalty for redeeming the loan would stop you from being able to sell quickly if business went off all of a sudden.

The money you pay in rent is not 'dead money'. Sounds like you have a fantastic flat to live in, without the risk of an over inflated purchase price biting you. In a property crash, luxury flats take the first hit, so you are better off renting. Rent a flat, or buy a house.

Last edited by p42; 20.07.2011 at 04:25.
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  #48  
Old 20.07.2011, 08:59
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Re: Buying a house, getting the 20%

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Just because i have decided to reinvest the extra money i have, does it make me financially instable?
Don't worry about it....its in the DNA of EF that if somebody posts "How can I do XYZ?", people tend to find it easier to reply "I don't think you should do XYZ" than to actually answer the question you asked.

So if when you post a question, you go into it knowing that more than half of the answers you get could have been written by your mum, you'll be fine.

I assumed in my replies that you were a big boy who knows how to wipe his bum and could decide whether 1. The house price was right and 2. you could afford it.....if i were you I wouldn't be tempted to reveal your personal finances to a public forum to try to persuade those who think you aren't
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  #49  
Old 20.07.2011, 11:09
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Re: Buying a house, getting the 20%

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Do you need to have cash savings to be financially stable?????? I have a property in glasgow worth 100'000 which the mortgage is down to 50, I also have a business which has an asset value of 150'000.- and a yearly turnover of xxxx (dont want to advertise to the world

Just because i have decided to reinvest the extra money i have, does it make me financially instable?
you don't need cash savings, but at least something to absorb unexpected shocks. whether that is through cash savings, insurance or something else you need it.

anyone kid who has played monopoly might know that you can play to maximise profits by buying everything and spending all your cash, but then even landing on old kent road can bankrupt you.

i can tell you that when i bought my property, my own 'stress test' factors included scenarios of how to handle mortgage rates in the 10% range at the same time as losing my job and receiving a mortgage margin call from the bank.

while you might not want to structure your life around unlikely tail risks, you might want to at least model them and see what the impact is before deciding whether (or how much) to mitigate against them.
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  #50  
Old 20.07.2011, 12:14
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Re: Buying a house, getting the 20%

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I also have a business which has an asset value of 150'000.- and a yearly turnover of xxxx
... so you do have assets. Can you borrow against your business?
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  #51  
Old 21.07.2011, 07:38
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Re: Buying a house, getting the 20%

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I would avoid cross currency borrowing ...
Yes. I wasn't really thinking of that.

Anyway, the most successful in terms of finances person in my extended family has never bought one single property. So, I don't believe it's always best to buy. But everyone has to do with they are comfortable with.

Personally (and not relevant at all cuz it's your life, i know ), I wouldn't want to have all that debt outstanding for the down payment.

But let us know how you get on. We are (ok, I am) nosey like that.
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  #52  
Old 21.07.2011, 10:49
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Re: Buying a house, getting the 20%

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Anyway, the most successful in terms of finances person in my extended family has never bought one single property. So, I don't believe it's always best to buy. But everyone has to do with they are comfortable with.
True, any financial advisor will tell you to never put all your eggs in one basket.

When people buy property they like to ignore that rule.

The banks end up making more money on your investment than you do.
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Old 21.07.2011, 11:21
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Re: Buying a house, getting the 20%

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Do you need to have cash savings to be financially stable?????? I have a property in glasgow worth 100'000 which the mortgage is down to 50, I also have a business which has an asset value of 150'000.- and a yearly turnover of xxxx (dont want to advertise to the world

Just because i have decided to reinvest the extra money i have, does it make me financially instable?
You do in Switzerland. At the moment, any assets in the UK will not weigh much in the balance- made even worse with the terrible exchange rate and the fact the E and are on the brink of collapse. Sad but true. The whole point of paying 20% in cash, is that should prices drop, or other cash flow occur, etc - the owner could still keep up re-payments and if worst happens, sell, even at a loss (-20%) and still re-pay what they owe.
I remember the days in the UK when we over-stretched to buy a house and then the mortgage rate went up to 19% or even more. Makes me feel sick just to think about it.
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