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  #21  
Old 03.07.2015, 14:06
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Re: mortgage, what's the worst case?

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Just using the numbers you gave. Though even with a 20% discount, it is still a hefty profit. Stamp duty is anyway paid by the buyer and other fees are nominal.
Stamp duty was paid on purchase, in addition to the purchase price...
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  #22  
Old 03.07.2015, 14:07
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Re: mortgage, what's the worst case?

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But in this scenario, all mortgage borrowers to a lesser or greater extent would be in the same situation, thus making it commercial madness for banks to foreclose on multiple loans. It's highly hypothetical...
Could make sense for the bank. They can try to recover as much as they can before the situation turns even worse.

Even at 50% nominal recovery on a $1m property means 500k out of an 800k loan. If the borrower has 300k in other assets, then the bank already is able to fully recover its capital and eliminate its risk entirely. If the borrower has 300k in an account at the bank, then they could take it with ease...
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Old 03.07.2015, 14:11
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Re: mortgage, what's the worst case?

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More than 50% higher in our case!

Tom
That's crazy.

When I told someone my running costs, they asked if the building had its own swimming pool! Mind you, they were comparing to their own running costs for a small flat in Ticino.
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  #24  
Old 03.07.2015, 14:15
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Re: mortgage, what's the worst case?

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worse case is that you are fully able to service the mortgage, but that prices fall and the bank makes a margin call on your mortgage that you are then not able to cover. then the bank forecloses on the house and puts it under auction with a short timeframe, meaning that there are no 'natural' buyers but someone punts in a cheeky offer for 30% the price you paid for it, which leaves you with no house and 50% of the mortgage. with the ensuing stress, your wife leaves you and has an affair with the neighbour causing your work to suffer and you lose your job and end up being deported.
Thankfully I have not been deported. Still holding. on .
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Old 03.07.2015, 14:18
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Re: mortgage, what's the worst case?

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That's crazy.
And wrong.

Actually, it's only 33% higher.

Of course, we also have an interest-only mortgage.

Tom
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Old 03.07.2015, 14:28
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Re: mortgage, what's the worst case?

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worse case is that you are fully able to service the mortgage, but that prices fall and the bank makes a margin call on your mortgage that you are then not able to cover.
Wow. I didn't think they could do that here. Or was that in the US?
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Old 03.07.2015, 14:32
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Re: mortgage, what's the worst case?

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Stamp duty was paid on purchase, in addition to the purchase price...
sure, but you're still talking only ~13k on 200k+ of profit. so quite some headroom before heading into loss territory.
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Old 03.07.2015, 14:34
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Re: mortgage, what's the worst case?

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Wow. I didn't think they could do that here. Or was that in the US?
yup, it seems to be standard in swiss mortgages. more so after they got burned lending on property in HU and other places where the currency tanked in comparison to CHF.
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  #29  
Old 03.07.2015, 16:10
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Re: mortgage, what's the worst case?

A quick rule of thumb is that if you're paying 3/3 to rent, then your mortgage and extra costs would be about 2/3 of that figure. Not to be confused with "Eigenmietwert" (Your town's tax assessment of how much you would earn if you rented out your own property).

If you have savings you're probably earning next to squat on interest, so it's up to you if you'd like to at least have a fighting chance of getting a bigger return than zero % and using the cash as a down payment for a property.
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Old 03.07.2015, 16:24
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Re: mortgage, what's the worst case?

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Not to be confused with "Eigenmietwert" (Your town's tax assessment of how much you would earn if you rented out your own property).
Which is then taxed as if you earnt it, but which is generally offset by tax relief on the interest you're paying on the (normally ) 65% mortgage
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