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Old 07.12.2011, 20:52
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Re: buying a house: where to start?

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Where do you reliably get 6% consistently? Honest disclosure, my stock portfolio is heavily focused on high dividend companies, but always eager to get some free advice
In Macedonia, banks are offering 6% pa for EUR deposits and 10% pa for MKD deposits. The local currency (MKD, Macedonian Denar) is tied with the EUR is has been the same value and as stable since 1991, when back then it was tied with DEM (german mark).

Just like in Switzerland, Macedonian banks have 20.000 EUR warranty on deposits if they go bust. Nothing will stop you to have more accounts.



People are not used to banks and still are hiding their money under the pillow. They don't take loans, but rather save and buy cars or apartments. That's why banks are offering so big interest rates on deposits, but if you want to take a credit, you are looking at 15% and 20% figures.
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Old 07.12.2011, 20:59
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Re: buying a house: where to start?

Do. Not. Trust. Banks.

They are looking after number 1, and you can be assured YOU are not it.
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Old 07.12.2011, 21:02
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Re: buying a house: where to start?

We recently bought a house in Villars sur Glane, Fribourg, and approached three different banks for the mortgage. We finally got one at 1.7% including some kind of 'family discount'.

From a rental of CHF 2310 for a 150 sq mtr 4.0 pc, we now have a montly outgo of CHF 1380 for a 100 sq mtr 4.5 pc, of which the mortgage of CHF 333/month is NOT an expense, but a saving.

As a nonEU B permit, I am allowed to retain the house, as well as rent it, if I leave CH.

I have occasionaly found some bargain properties on anibis.ch, a free classifieds site for the French part.
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  #44  
Old 07.12.2011, 21:06
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Re: buying a house: where to start?

As a matter of interest, did you buy in Villars because you work there, or because you could get much more property for less money there + worked out that prices might go up with displacement of businesses to the area and over-crowding and over-pricing elsewhere?
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Old 07.12.2011, 21:07
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Re: buying a house: where to start?

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And what about at the end of that 30 year period?
Option A) keep renting
Option B) live low cost, or sell and use it as additional retirement

Valid points, I did not want to *prove* that renting is better than buying financially, because it all depends on your growth assumptions. All I was trying to show is that stealth costs such as home "improvement" costs can radically alter the picture if it is not taken into account as a reality at the outset.
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Old 07.12.2011, 21:10
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Re: buying a house: where to start?

Not every home owner wants to rip out kitchens, bathrooms, etc and replace. A great house with potential, a pleasant location and a bit of land is much more important for some of us than a posh kitchen and bathroom. As long as the essentials are in good order.
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Old 07.12.2011, 21:12
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Re: buying a house: where to start?

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We recently bought a house in Villars sur Glane, Fribourg, and approached three different banks for the mortgage. We finally got one at 1.7% including some kind of 'family discount'.

From a rental of CHF 2310 for a 150 sq mtr 4.0 pc, we now have a montly outgo of CHF 1380 for a 100 sq mtr 4.5 pc, of which the mortgage of CHF 333/month is NOT an expense, but a saving.

As a nonEU B permit, I am allowed to retain the house, as well as rent it, if I leave CH.

I have occasionaly found some bargain properties on anibis.ch, a free classifieds site for the French part.
Do you mean the principal repayment on the mortgage is a saving?
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Old 07.12.2011, 21:18
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Re: buying a house: where to start?

We rented our house for a short while before we bought it. It cost 3200 Chf per month. We now pay 550 Chf per month mortgage. It is a modern house and in the 5 years we have owned it, we have barely spent 5000 Chf on maintenance. Even with the static/very low increasing land values in this area, I cannot see that for us personally renting would have been any sense at all.

It depends on individual personal financial circumstances and also whether you consider a house a home or an investment. I am pleased to have a house where I can shut the door and not be told by anyone what to do or when to do it . That, to me, is priceless.
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  #49  
Old 07.12.2011, 21:19
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Re: buying a house: where to start?

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Not every home owner wants to rip out kitchens, bathrooms, etc and replace. A great house with potential, a pleasant location and a bit of land is much more important for some of us than a posh kitchen and bathroom. As long as the essentials are in good order.
That's true, until if and when you need to sell your house, to realize the capital gains that was the premise all along. I mean, that's why people invest their 3rd pillars as deposits, to get a return.

Then, it becomes very important that your house has a kitchen, etc. that competes with the rest on offer. And if you didn't do your upgrades as time passed, you will either have to lower your selling price drastically to lure buyers, or have an serious all-at-once expense to get up to "standard".
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Old 07.12.2011, 21:21
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Re: buying a house: where to start?

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That's true, until if and when you need to sell your house, to realize the capital gains that was the premise all along. I mean, that's why people invest their 3rd pillars as deposits, to get a return.
Not sure I agree with this. Our house plays no role in our pension or investment portfolio (fancy term for something not very fancy at all). It's our family home. That's it.
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Old 07.12.2011, 21:35
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Re: buying a house: where to start?

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Not sure I agree with this. Our house plays no role in our pension or investment portfolio (fancy term for something not very fancy at all). It's our family home. That's it.
It's not something you can disagree with. It merely is not the case for you. It's a fact that a lot of people invest their 3rd pillar as a means to afford a deposit, in fact Credit Suisse recently published a paper advising people to do this. Your house then becomes by far the largest asset in your retirement portfolio.
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  #52  
Old 07.12.2011, 21:40
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Re: buying a house: where to start?

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Well ......... I obviously wasn't entirely serious.

However, for me all the threads listed excellent advice if:
a) you are Swiss
b) Intend to live here forever
c) Are buying only for the 'house' to live in, and not necessarily for an investment.
d) You have pocketfulls of cash to throw at the place.
Well, we bought a house because we needed a bigger one, couldn't afford the rent for the size of house/flat we wanted and it was cheaper year-on-year to buy.

And yes, we don't plan on going anywhere - although we are EU.
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Old 07.12.2011, 21:45
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Re: buying a house: where to start?

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Let's go back to the example above



Okay, I don't know how accurate or typical those figures are.

But let's assume they'r OK.

So I'm buying a house for a down payment of 180K plus a monthly payment for 30 years of 2563.

= 180,000 + 30 * 12 * 2563 = 1,102,680 CHF.

So you're forking out over 1.1 million for a house that's worth 0.6 million, and for the pleasure you additionally own all the janitorial costs and all the other stuff that's included in the price of renting. When there's renovation needing to be done you're spending your sunday afternoons in overalls doing fiddly stuff rather than playing in the park with the kids. You're the one who's turning down the cool jobs because you can't relocate etc etc. I'd rather take that money and buy a tiny part of the bank that's financing your house, because they're making more on the deal than you are.

If you can get say 6% on your money, then those 180,000 will be 1,033,828 after 30 years. So I'm up by almost the amount you've payed without even factoring in the 63CHF per month I'm saving through renting rather than buying. To make good for that your house must have reached over 1.2 million in value by then. Are you prepared to wager all your life's savings on that happening? I'm not. I prefer not to have all my eggs in the same basket.

Can you please explain this logic since I am struggling to work it out.

The claim is that the person buying pays 1,102,680CHF for a home worth 0.6Million. Not right!!

This amount included a deposit of 180,000 that has persumable increased as would the remainder of the house value. In a suitable area the house would increase 2-4 times in value over a 30 year period. They therefore pay the claimed amount for a home worth about the same or double.

In the meantime you assume your rent stays the same for 30 years!! More likely it increase 1-3% each year so your rent will be higher regardless. The rent once paid is gone and it will be easily equaly to the mortgage payments.

The factor missing from the point is that while you can compare the numbers and show what ever result suits a set of assumptions taking out a mortgage is a commitment that acts as a disciplined savings plan. I am yet to find someone with a spare 180,000CHF that has the discipline to invest it consistently over 30 years.

If you have the means to go the mortgage path it will easily out perform in the longer term. Unless you have found a magic place where youi will commit the 180000CHF for the time period involved
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Old 07.12.2011, 21:54
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Re: buying a house: where to start?

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It's not something you can disagree with. It merely is not the case for you.
No, I do disagree with it. That is why it is not the case for me, despite being invited to invest our 3rd pillar at the time of purchase.

And in any event, to release that pension value, surely you have to sell the house or increase the mortgage (just when you've lost your salary). That's not a barrel I want to be peering down aged 65.
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Old 07.12.2011, 22:08
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Re: buying a house: where to start?

The mortgage is a 'capital' payment - it remains with you, and is recovered when you sell the house at cost. Appreciation, if any, is an additional benifit.

Ofcourse, one needs to pay a tax on the capital gain, but it is about 10% (I think) and not 100%, so even after the tax one has some 'income' left to enjoy.

Villars sur Glane is 10 mins from Fribourg, which still has reasonable (low?) property prices. For me the monthly saving of CHF1000+ was justification enough to buy.
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Old 07.12.2011, 22:15
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Re: buying a house: where to start?

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Let's go back to the example above

Okay, I don't know how accurate or typical those figures are.

But let's assume they'r OK. Let's not
Sorry, but the calculation are just not accurate. He's adding 2% per year on "forced capital expenses". 360K? I don't think so. How often is he planning on changing the kitchen? 10 times in 30 years? We've paid less than 0.005% in 5 years.

And again, you are paying from your retirement fund which is not going to give you a 6%. Can you opt out of your retirement fund?

Renting the same property is more expensive, up to twice as expensive in some places, which gives you more money to put to work in your 6% investment fund. So you're not really keeping all your eggs in one basket are you?

To add to that, we HAVE taken a cool job abroad and still own a house in CH.


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That's true, until if and when you need to sell your house, to realize the capital gains that was the premise all along. I mean, that's why people invest their 3rd pillars as deposits, to get a return.

Then, it becomes very important that your house has a kitchen, etc. that competes with the rest on offer. And if you didn't do your upgrades as time passed, you will either have to lower your selling price drastically to lure buyers, or have an serious all-at-once expense to get up to "standard".
Not in Switzerland. It's perfectly normal to keep a kitchen for 20 years. How often are you changing your kitchen?

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The mortgage is a 'capital' payment - it remains with you, and is recovered when you sell the house at cost. Appreciation, if any, is an additional benifit.

Ofcourse, one needs to pay a tax on the capital gain, but it is about 10% (I think) and not 100%, so even after the tax one has some 'income' left to enjoy.

Villars sur Glane is 10 mins from Fribourg, which still has reasonable (low?) property prices. For me the monthly saving of CHF1000+ was justification enough to buy.
Absolutely.


Anyway, I'm not saying everyone should buy. I'm just saying these are all thing that need to be looked at when you are thinking of buying. Not one view or the other is "correct". You have to see what you expect and look at all the variables for a specific property/area, etc.
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Old 07.12.2011, 22:21
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Re: buying a house: where to start?

Well thanks all for your helpful replies
My main question was where to start when buying, not should i buy or rent -

Our reason (one of them anyway) for buying is to have a family home for our children - its not an investment - not something to tear down to rebuild room by room (although i do love redecorating and will dabble in it from time to time ) Nor do we even need to rethink the advantages and disadvantages of buying and renting because for us its very clear. But just on that note I would like to point out my personal opinion (regarding MY life and future etc) is that I dont want to be spending my (potentially low) pension on rent when i could be owning my home and spending it on living well

Somebody put up a link to switzerland.is.yours.com - thanks a bunch for that - had never seen that site before - full of useful tips

Someone else mentioned Credit Suisse (and had seen it mentioned as a good place to start elsewhere)- I will check them out too tx

I know its too early now to start looking at actual property before i have the procedure in order in my head but I still cant find any 'down to earth' sites that sell affordable property in my area - I can find any sort of chalet you want but normal houses in my area seem rare - is this true or am i just blind? And yes I know St. Croix etc is reasonably cheaper but I couldnt live that far into the country Yverdon is perfect for me for him and for the kids
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Old 07.12.2011, 22:21
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Re: buying a house: where to start?

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As a matter of interest, did you buy in Villars because you work there, or because you could get much more property for less money there + worked out that prices might go up with displacement of businesses to the area and over-crowding and over-pricing elsewhere?
It is nice residential area + most importantly my teenage daughter could continue to attend her present CO. I personally feel commercial considerations should not play a bigger role in a house ( as opposed to property) buying decision.

If one wants to look at property as an investment, the best returns are probably in the developing world. My 'properties' back home in India typically fetch a 8% annual rental + roughly 10% yearly value appreciation. Let me point out before anyone gets too exited about this, that I need to manage these 'hands on' (2-3 trips / year), and it is a far from enjoyable experience - the managing, not the trips
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Old 07.12.2011, 22:33
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Re: buying a house: where to start?

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Well thanks all for your helpful replies
My main question was where to start when buying, not should i buy or rent -

Our reason (one of them anyway) for buying is to have a family home for our children - its not an investment - not something to tear down to rebuild room by room (although i do love redecorating and will dabble in it from time to time ) Nor do we even need to rethink the advantages and disadvantages of buying and renting because for us its very clear. But just on that note I would like to point out my personal opinion (regarding MY life and future etc) is that I dont want to be spending my (potentially low) pension on rent when i could be owning my home and spending it on living well

Somebody put up a link to switzerland.is.yours.com - thanks a bunch for that - had never seen that site before - full of useful tips

Someone else mentioned Credit Suisse (and had seen it mentioned as a good place to start elsewhere)- I will check them out too tx

I know its too early now to start looking at actual property before i have the procedure in order in my head but I still cant find any 'down to earth' sites that sell affordable property in my area - I can find any sort of chalet you want but normal houses in my area seem rare - is this true or am i just blind? And yes I know St. Croix etc is reasonably cheaper but I couldnt live that far into the country Yverdon is perfect for me for him and for the kids
We used a mortgage broker. They went to a bunch of banks and laid out all the options for us. They went through the whole process with us and explained everything. We ended up with UBS who also happened to have the loan on the same house. So they gave us a bit of a better deal. Plus they gave us a valuation that gave us leverage on negotiating the house price.
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Old 07.12.2011, 22:52
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Re: buying a house: where to start?

We approached Banque Migros, Raiffesen, and the Banque Cantonale de Friboung. Did the whole thing by myself - in English, not French. Most pleasant experience with BCF, from whom we finally took the mortgage.
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