Go Back   English Forum Switzerland > Help & tips > Housing in general  
Reply
 
Thread Tools Display Modes
  #21  
Old 10.08.2012, 00:24
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
The last 50 years has shown a steady increase in value of property, making of course the % that is the mortgage smaller over time.
.
It's the land that has increased in Value, however any 50 year old house that has not had major works carried out would probably have a negative value & be replaced. It's very common in London too......
Reply With Quote
  #22  
Old 08.08.2014, 18:25
Newbie 1st class
 
Join Date: Aug 2012
Location: Aalborg
Posts: 28
Groaned at 7 Times in 4 Posts
Thanked 8 Times in 2 Posts
dreamsis has become a little unpopulardreamsis has become a little unpopular
Re: Mortgage in Switzerland

OK, so once I paid back 35% of my mortgage - 20% in cash on a day when I get the mortgage from a bank and let's say 15% after 5 years...
Let's say I am 40 years old and don't want to pay those 65% back, so I will be paying the interest (let's say 2% per year) of those 65% for the rest of my life until I die?
How much of those 2% can I subtract from the taxes that I pay every year?
All 2%?
Reply With Quote
  #23  
Old 08.08.2014, 19:24
Ace1's Avatar
A singular modality
 
Join Date: Sep 2011
Location: Morgins, VS
Posts: 7,195
Groaned at 220 Times in 163 Posts
Thanked 11,520 Times in 5,074 Posts
Ace1 has a reputation beyond reputeAce1 has a reputation beyond reputeAce1 has a reputation beyond reputeAce1 has a reputation beyond reputeAce1 has a reputation beyond reputeAce1 has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
OK, so once I paid back 35% of my mortgage - 20% in cash on a day when I get the mortgage from a bank and let's say 15% after 5 years...
Let's say I am 40 years old and don't want to pay those 65% back, so I will be paying the interest (let's say 2% per year) of those 65% for the rest of my life until I die?
How much of those 2% can I subtract from the taxes that I pay every year?
All 2%?
The normally quoted equation, and one which we have in place, is that we can can claim back tax from around a 35% mortgage which is equivalent to the tax you pay on the theoretical rental income. In other words it's a net zero, but the reason most people keep the ~35% interest-only mortgage in place is that they pay tax on the rental income anyway, but the mortgage tax relief offsets it.

When we took out our mortgage I asked the bank manager about this, and should we pay off the mortgage at all, and he said an emphatic no, not just for this reason but also that we had a fixed rate on the 65% capital repayment mortgage that was ridiculously low, actually below LIBOR, IIRC. He said they would be able to invest any extra cash at much higher yields than the interest rate we were paying.

It was one of those 'Switzerlanded' moments, but not for the usual reasons, just the first time we'd seen how the banking system is clearly geared to help richer people get richer still...
Reply With Quote
  #24  
Old 08.08.2014, 21:07
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
OK, so once I paid back 35% of my mortgage - 20% in cash on a day when I get the mortgage from a bank and let's say 15% after 5 years...
Let's say I am 40 years old and don't want to pay those 65% back, so I will be paying the interest (let's say 2% per year) of those 65% for the rest of my life until I die?
How much of those 2% can I subtract from the taxes that I pay every year?
All 2%?

Just the tax on the 2% so maybe 15% is your tax rate & 85% is 'wasted'
Reply With Quote
  #25  
Old 10.08.2014, 09:38
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,118
Groaned at 268 Times in 174 Posts
Thanked 15,399 Times in 6,528 Posts
Phil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
The normally quoted equation, and one which we have in place, is that we can can claim back tax from around a 35% mortgage which is equivalent to the tax you pay on the theoretical rental income. In other words it's a net zero, but the reason most people keep the ~35% interest-only mortgage in place is that they pay tax on the rental income anyway, but the mortgage tax relief offsets it.

When we took out our mortgage I asked the bank manager about this, and should we pay off the mortgage at all, and he said an emphatic no, not just for this reason but also that we had a fixed rate on the 65% capital repayment mortgage that was ridiculously low, actually below LIBOR, IIRC. He said they would be able to invest any extra cash at much higher yields than the interest rate we were paying.

It was one of those 'Switzerlanded' moments, but not for the usual reasons, just the first time we'd seen how the banking system is clearly geared to help richer people get richer still...
Of course he would say that since they make money from providing you services!
Reply With Quote
This user would like to thank Phil_MCR for this useful post:
  #26  
Old 12.08.2014, 10:29
Bozza's Avatar
Forum Veteran
 
Join Date: Jul 2009
Location: Zurich
Posts: 506
Groaned at 12 Times in 8 Posts
Thanked 334 Times in 180 Posts
Bozza has made some interesting contributions
Re: Mortgage in Switzerland

Quote:
View Post
Just the tax on the 2% so maybe 15% is your tax rate & 85% is 'wasted'
So people carry on paying 85% of the interest rate for the rest of their lives? I understand that this offsets against the Eigenmietwert and reduces wealth tax but I think forever paying interest on a large chunk of your house will leave you worse off overall? Is that right?

I understand the separate point of borrowing at 1.5% (net of tax relief say) and trying to save at a higher rate like 2.5% (again, net of income tax) rather than paying the mortgage off. If you can do the 2.5% within a pension fund, then you don't get wealth tax on that bit too... I think.

Reply With Quote
  #27  
Old 12.08.2014, 10:41
pagl57's Avatar
Member
 
Join Date: Aug 2008
Location: Fribourg
Posts: 239
Groaned at 0 Times in 0 Posts
Thanked 98 Times in 62 Posts
pagl57 is considered knowledgeablepagl57 is considered knowledgeablepagl57 is considered knowledgeable
Re: Mortgage in Switzerland

Quote:
View Post
So people carry on paying 85% of the interest rate for the rest of their lives? I understand that this offsets against the Eigenmietwert and reduces wealth tax but I think forever paying interest on a large chunk of your house will leave you worse off overall? Is that right?
You will pay anyhow, be it on interest or on wealth tax. What advice do you think the bank will give you? Pay taxes to the community instead of interest to the bank?
No doubt you will be worse off overall. Not paying off makes you kind of a concierge of your house for the bank...
Reply With Quote
  #28  
Old 12.08.2014, 10:44
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
You will pay anyhow, be it on interest or on wealth tax. What advice do you think the bank will give you? Pay taxes to the community instead of interest to the bank?
No doubt you will be worse off overall. Not paying off makes you kind of a concierge of your house for the bank...
So loose 15% of your money in tax or 100% of your money in interest. Personally I would rather keep 85% of my money for myself but that's just me.
Reply With Quote
  #29  
Old 12.08.2014, 11:01
pagl57's Avatar
Member
 
Join Date: Aug 2008
Location: Fribourg
Posts: 239
Groaned at 0 Times in 0 Posts
Thanked 98 Times in 62 Posts
pagl57 is considered knowledgeablepagl57 is considered knowledgeablepagl57 is considered knowledgeable
Re: Mortgage in Switzerland

Quote:
View Post
So loose 15% of your money in tax or 100% of your money in interest. Personally I would rather keep 85% of my money for myself but that's just me.
Of course, me too. However, a lot of people don't. Maybe their investment is just too heavy for them.
Another advice from the bank is to keep your savings. We all like to have savings. In fact the only way to save is to pay back your mortgage...
Reply With Quote
This user would like to thank pagl57 for this useful post:
  #30  
Old 12.08.2014, 11:09
AbFab's Avatar
Forum Legend
 
Join Date: Sep 2006
Location: Zürich
Posts: 7,178
Groaned at 309 Times in 206 Posts
Thanked 9,456 Times in 3,331 Posts
AbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond repute
Re: Mortgage in Switzerland

I worked out earlier this year when completing my tax return that I would be marginally better off paying off my mortgage, which I could.

However, this would seriously eat into my capital. I look at it like this: the bank loans me money at 1.5% (currently) which leaves my capital intact to invest elsewhere, albeit with risk, but a higher rate of interest.

All investment advice I have ever received from both banks and financial experts has proved to be rubbish...
Reply With Quote
The following 2 users would like to thank AbFab for this useful post:
  #31  
Old 12.08.2014, 11:25
simonminissale's Avatar
Forum Veteran
 
Join Date: Nov 2007
Location: Ammerswill
Posts: 835
Groaned at 8 Times in 6 Posts
Thanked 859 Times in 363 Posts
simonminissale has a reputation beyond reputesimonminissale has a reputation beyond reputesimonminissale has a reputation beyond reputesimonminissale has a reputation beyond repute
Re: Mortgage in Switzerland

HAs the whole system got anything to do with the fact that once you are retired in Switzerland, you still get a pretty decent income which you can service your debt ? In Australia you would have no chance of paying off a loan on the pension but here it seems possible ? We have a loan and have paid nothing off the principle yet, I would like to but we had to put extra funds into life insurance funds in order to get the loan from the bank. At the moment, in hindsight and with such low interest rates, it seemed like a good decision to buy, who knows what will happen in the future. But I think I would be pretty uncomfortable shelling out 2-3 grand rent every month, paying off someone elses mortgage and if interets rates go up, so do rents.........
Reply With Quote
  #32  
Old 12.08.2014, 12:09
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,118
Groaned at 268 Times in 174 Posts
Thanked 15,399 Times in 6,528 Posts
Phil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
I worked out earlier this year when completing my tax return that I would be marginally better off paying off my mortgage, which I could.

However, this would seriously eat into my capital. I look at it like this: the bank loans me money at 1.5% (currently) which leaves my capital intact to invest elsewhere, albeit with risk, but a higher rate of interest.

All investment advice I have ever received from both banks and financial experts has proved to be rubbish...
I think this is the trade-off. If you can borrow for 1%, you need to pay only 125chfs a month for the flexibiltiy of having 150k to use. You could invest this, and maybe earn, a higher amount in dividends etc. or use it as a deposit to buy more property!
Reply With Quote
This user would like to thank Phil_MCR for this useful post:
  #33  
Old 12.08.2014, 18:20
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
I think this is the trade-off. If you can borrow for 1%, you need to pay only 125chfs a month for the flexibiltiy of having 150k to use. You could invest this, and maybe earn, a higher amount in dividends etc. or use it as a deposit to buy more property!
a few months ago you posted that you had paid off your Swiss mortgage, so your advise is theory rather than practice
Reply With Quote
The following 2 users would like to thank fatmanfilms for this useful post:
  #34  
Old 12.08.2014, 22:41
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,118
Groaned at 268 Times in 174 Posts
Thanked 15,399 Times in 6,528 Posts
Phil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond reputePhil_MCR has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
a few months ago you posted that you had paid off your Swiss mortgage, so your advise is theory rather than practice
At the time, I didn't want to deal with the money, but I regret it as a few things came up since and I wish I had the extra cash.
Reply With Quote
  #35  
Old 27.07.2016, 18:53
Newbie
 
Join Date: Jul 2016
Location: Lausanne
Posts: 3
Groaned at 0 Times in 0 Posts
Thanked 0 Times in 0 Posts
lausanneaussie has no particular reputation at present
Re: Mortgage in Switzerland

Does anyone know if the banks will lend the approximately 5% required notary and transfer fees in Canton Vaud?
Reply With Quote
  #36  
Old 27.07.2016, 19:22
miniMia's Avatar
Forum Legend
 
Join Date: Apr 2007
Location: romandie
Posts: 9,994
Groaned at 99 Times in 90 Posts
Thanked 8,921 Times in 4,447 Posts
miniMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
Does anyone know if the banks will lend the approximately 5% required notary and transfer fees in Canton Vaud?
You only need to ask once!! You question has been answered on two other threads!
Reply With Quote
This user would like to thank miniMia for this useful post:
  #37  
Old 27.07.2016, 20:01
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
Does anyone know if the banks will lend the approximately 5% required notary and transfer fees in Canton Vaud?


If you make a 25% deposit based on their valuation they probably will
Reply With Quote
This user would like to thank fatmanfilms for this useful post:
  #38  
Old 27.07.2016, 20:15
miniMia's Avatar
Forum Legend
 
Join Date: Apr 2007
Location: romandie
Posts: 9,994
Groaned at 99 Times in 90 Posts
Thanked 8,921 Times in 4,447 Posts
miniMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
If you make a 25% deposit based on their valuation they probably will
Great. Now we have three different answers on three different threads!
Reply With Quote
  #39  
Old 27.07.2016, 23:44
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,467
Groaned at 273 Times in 223 Posts
Thanked 14,783 Times in 8,228 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
Great. Now we have three different answers on three different threads!
No doubt they only wanted to make a 20% deposit & then borrow 85% of valuation, that won't work.
Reply With Quote
  #40  
Old 28.07.2016, 10:55
miniMia's Avatar
Forum Legend
 
Join Date: Apr 2007
Location: romandie
Posts: 9,994
Groaned at 99 Times in 90 Posts
Thanked 8,921 Times in 4,447 Posts
miniMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond reputeminiMia has a reputation beyond repute
Re: Mortgage in Switzerland

Quote:
View Post
No doubt they only wanted to make a 20% deposit & then borrow 85% of valuation, that won't work.
As I said in the other thread, it depends! It did when my ex and I bought the house with my ex. This time the same bank said no. I need to have that in cash.
Reply With Quote
Reply

Tags
bank, loan, mortgage, mortgages




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Swiss mortgage/remortgage on house in UK? martinreed Housing in general 29 05.09.2016 00:44
Change my Residential Mortgage in the UK? JKUser Finance/banking/taxation 21 24.09.2015 10:00
Paying off mortgage (monthly) in UK from salary in CHF Denman Finance/banking/taxation 27 29.07.2011 17:46
Mortgage Brokerage in Vaud? thefunone Finance/banking/taxation 3 04.07.2010 10:52
Mortgage interest in home country kvrbpl Finance/banking/taxation 0 11.01.2010 10:44


All times are GMT +2. The time now is 02:33.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0