Go Back   English Forum Switzerland > Help & tips > Housing in general  
Reply
 
Thread Tools Display Modes
  #1  
Old 03.07.2015, 13:44
Senior Member
 
Join Date: Jan 2008
Location: Basel
Posts: 326
Groaned at 40 Times in 21 Posts
Thanked 30 Times in 21 Posts
Gaggiol0 is considered unworthyGaggiol0 is considered unworthyGaggiol0 is considered unworthyGaggiol0 is considered unworthy
mortgage, what's the worst case?

What's the worst case of being involved in a long term mortgage?
In the end, if you can't pay your rate, you can still sell the property isn't it?
Reply With Quote
  #2  
Old 03.07.2015, 13:47
roegner's Avatar
Moderately Dutch
 
Join Date: May 2011
Location: Zurich
Posts: 10,253
Groaned at 346 Times in 288 Posts
Thanked 12,101 Times in 5,858 Posts
roegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond repute
Re: mortgage, what's the worst case?

You default on the mortgage and the bank sells it by auction. Worst case that does not bring enough money and you end up with no house and still a mortgage.
If you have an issue with a mortgage payment, talk to the bank!
Reply With Quote
The following 4 users would like to thank roegner for this useful post:
  #3  
Old 03.07.2015, 13:52
Senior Member
 
Join Date: Jan 2008
Location: Basel
Posts: 326
Groaned at 40 Times in 21 Posts
Thanked 30 Times in 21 Posts
Gaggiol0 is considered unworthyGaggiol0 is considered unworthyGaggiol0 is considered unworthyGaggiol0 is considered unworthy
Re: mortgage, what's the worst case?

Quote:
View Post
You default on the mortgage and the bank sells it by auction. Worst case that does not bring enough money and you end up with no house and still a mortgage.
If you have an issue with a mortgage payment, talk to the bank!
I am deciding whether to buy or rent and hause and I think I am just going to rent it, I don't feel like giving all my cash to a bank end being held by the neck...
Reply With Quote
This user would like to thank Gaggiol0 for this useful post:
  #4  
Old 03.07.2015, 14:00
roegner's Avatar
Moderately Dutch
 
Join Date: May 2011
Location: Zurich
Posts: 10,253
Groaned at 346 Times in 288 Posts
Thanked 12,101 Times in 5,858 Posts
roegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond reputeroegner has a reputation beyond repute
Re: mortgage, what's the worst case?

Second time buyer here.
It all depends on your personal circumstances. Buying can be cheaper if you compare the interest rate to the amount of rent you pay. If it is tight, then you could have sleepless nights when things aren´t going that well at work.....

But as loads of people buy houses, it somehow must be doable
Reply With Quote
This user would like to thank roegner for this useful post:
  #5  
Old 03.07.2015, 14:00
Carlos R's Avatar
Forum Legend
 
Join Date: Dec 2009
Location: Roundn'about Basel
Posts: 7,237
Groaned at 105 Times in 95 Posts
Thanked 9,933 Times in 4,177 Posts
Carlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond repute
Re: mortgage, what's the worst case?

Quote:
View Post
I am deciding whether to buy or rent and hause and I think I am just going to rent it, I don't feel like giving all my cash to a bank end being held by the neck...
Work out what would be cheaper. (Hint: check out the search function, the pros and cons have been discussed many times, as mortgages in this country are unique...)

In my case owning a house. By a long way. But yes, as said above, the worst thing that can happen is you lose your house and are still in debt.

PS: 3rd-time buyer... including one buy-to-let. I only put that in to be one up on roegner
Reply With Quote
This user would like to thank Carlos R for this useful post:
  #6  
Old 03.07.2015, 14:08
Ace1's Avatar
A modal singularity
 
Join Date: Sep 2011
Location: Morgins, VS (and Alsace)
Posts: 8,404
Groaned at 328 Times in 215 Posts
Thanked 13,988 Times in 6,145 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, what's the worst case?

Quote:
View Post
In my case owning a house. By a long way.
Surely, apart from the risk of defaulting, this is going to be true for everyone, no?

Quote:
View Post
But yes, as said above, the worst thing that can happen is you lose your house and are still in debt.
It's worth stressing that Swiss property prices really can go down over time. The common adage in Britain and elsewhere that values will always increase in the long term does not apply here. We bought our Engelberg flat, 25 y-o, for around 2/3 of its original asking price, for example.

Quote:
View Post

In my case owning a house. By a long way. But yes, as said above, the worst thing that can happen is you lose your house and are still in debt.

PS: 3rd-time buyer... including one buy-to-let. I only put that in to be one up on roegner
Five now for me...
Reply With Quote
  #7  
Old 03.07.2015, 14:12
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,835
Groaned at 271 Times in 177 Posts
Thanked 16,951 Times in 7,172 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, what's the worst case?

Quote:
View Post
Five now for me...
No wonder there's a bloody house price bubble in Switzerland!
Reply With Quote
  #8  
Old 03.07.2015, 14:16
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,835
Groaned at 271 Times in 177 Posts
Thanked 16,951 Times in 7,172 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, what's the worst case?

Quote:
View Post
What's the worst case of being involved in a long term mortgage?
In the end, if you can't pay your rate, you can still sell the property isn't it?
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.
__________________
By replying to this post, you hereby grant Phil_MCR a royalty-free license to use, in any way, anything posted by you on the internet. If you do not accept, stop using EF and delete your account.
Reply With Quote
The following 11 users would like to thank Phil_MCR for this useful post:
  #9  
Old 03.07.2015, 14:18
Banned
 
Join Date: Jul 2015
Location: Aargau
Posts: 846
Groaned at 322 Times in 159 Posts
Thanked 324 Times in 229 Posts
plumtree is considered unworthyplumtree is considered unworthyplumtree is considered unworthyplumtree is considered unworthy
Re: mortgage, what's the worst case?

Quote:
View Post
I am deciding whether to buy or rent and hause and I think I am just going to rent it, I don't feel like giving all my cash to a bank end being held by the neck...
I would definitely opt for buying. Interest rates are very low and you can choose a fixed-rate mortgage for 10 years for example meaning the amount you pay the bank per month doesn't increase during those 10 years.

I rented for a couple of years at the very beginning, but then saw not only was it a complete waste of money, it was also on the whole around anywhere from double to quintuple the amount per month to rent, including the running costs, so swiftly switched to an "Eigentümswohnung".

A person who rents a flat identical or even smaller in size than mine, in the same building, pays 2.5 times as much on rent and running costs than I do on mortgage and running costs.

Some mortgages now are so low, that the running costs are higher per month than the mortgage!

If you already have C-permit for example, you shouldn't have any restriction on purchasing property regardless of nationality.

You need a minimum of 20% of the purchase price in cash (in your bank account) to pay to the bank at the time of purchase. The rest is mortgaged. I used PostFinance and found them to be helpful and professional with no hidden costs.

I believe you have to pay your mortgage back four times a year (once per trimester), - I would have preferred it to be monthly, but am not sure if this is possible (and haven't asked).

Example: Mortgage is Fr. 600.-- per month for 3 months of Jan, Feb and Mar. On Mar 31st the bank debits your account for Fr. 1'800.-- etc. Whilst the running costs are paid to the property management office who looks after the running of your building. If it is a mono-family house, then you pay your running costs yourself, i.e. heating directly to whoever supplies your heating fuel etc.

Hope to be of some help.
Reply With Quote
  #10  
Old 03.07.2015, 14:19
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 18,712
Groaned at 356 Times in 285 Posts
Thanked 18,415 Times in 9,939 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, what's the worst case?

Quote:
View Post
Surely, apart from the risk of defaulting, this is going to be true for everyone, no?


It's worth stressing that Swiss property prices really can go down over time. The common adage in Britain and elsewhere that values will always increase in the long term does not apply here. We bought our Engelberg flat, 25 y-o, for around 2/3 of its original asking price, for example.



Five now for me...
I don't think property in the USA or Germany has been a worthwhile investment over 30 years, not much better in CH. in the UK yes, however the no's just don't make sense. My OH has a property that could be rented for £1400 a month but she believes is worth £750,000. She paid £425,000 & spent £100,000. Makes equities seem really cheap.
Reply With Quote
  #11  
Old 03.07.2015, 14:29
eddiejc1's Avatar
Forum Veteran
 
Join Date: Nov 2009
Location: Derwood, MD USA
Posts: 1,005
Groaned at 22 Times in 20 Posts
Thanked 684 Times in 372 Posts
eddiejc1 has an excellent reputationeddiejc1 has an excellent reputationeddiejc1 has an excellent reputationeddiejc1 has an excellent reputation
Re: mortgage, what's the worst case?

This doesn't apply to me since I am not making enough money to buy a house, but if the OP is, he should consider that many governments have programs to help their citizens buy houses and programmes to help homeowners if they get in trouble with their mortgage payments---but those programmes are only available for their country's CITIZENS.

Another thing to consider is this---does the OP want to buy a house to live in and raise a family, or is he doing so mainly as a financial investment?
Reply With Quote
  #12  
Old 03.07.2015, 14:44
Ace1's Avatar
A modal singularity
 
Join Date: Sep 2011
Location: Morgins, VS (and Alsace)
Posts: 8,404
Groaned at 328 Times in 215 Posts
Thanked 13,988 Times in 6,145 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, what's the worst case?

Quote:
View Post
No wonder there's a bloody house price bubble in Switzerland!
Not five now, you wassock, just five in total over the years.

Now it's just one each in France and CH.
Reply With Quote
The following 2 users would like to thank Ace1 for this useful post:
  #13  
Old 03.07.2015, 14:44
Forum Legend
 
Join Date: Sep 2006
Location: SZ
Posts: 10,424
Groaned at 29 Times in 25 Posts
Thanked 23,977 Times in 7,549 Posts
meloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond repute
Re: mortgage, what's the worst case?

Quote:
View Post
This doesn't apply to me since I am not making enough money to buy a house, but if the OP is, he should consider that many governments have programs to help their citizens buy houses and programmes to help homeowners if they get in trouble with their mortgage payments---but those programmes are only available for their country's CITIZENS.
Eddie, the average Swiss has a very different notion of the value of home ownership than the average American does. According to a study I saw some years ago only 30% of the Swiss own their homes (10% in KT ZH). There are many reasons for this, not the least is the need for several hundred thousand upfront to make the deposit on a million plus home. (A million plus in my area is not a luxury home, rather something that would fall on the 'small starter home, in need of TLC' in US terms). But it's not just finances.

Switzerland is a country of renters, there is not the same intrinsic value placed on owning your own for walls, it is not considered a social good, something all should aspire to, as it is in the US.
Reply With Quote
The following 2 users would like to thank meloncollie for this useful post:
  #14  
Old 03.07.2015, 14:48
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,835
Groaned at 271 Times in 177 Posts
Thanked 16,951 Times in 7,172 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, what's the worst case?

Quote:
View Post
I don't think property in the USA or Germany has been a worthwhile investment over 30 years, not much better in CH. in the UK yes, however the no's just don't make sense. My OH has a property that could be rented for £1400 a month but she believes is worth £750,000. She paid £425,000 & spent £100,000. Makes equities seem really cheap.
is it really that bad?

even at these ridiculous valuations, you are talking about a 2.24% yield that is inflation-indexed. though not really considered an worthwhile investment for property, it is still a better yield than many stocks.

a 43% capital gain already and the opportunity of a tax free exit (UK). with leverage, the gain is probably 3x the investment.
Reply With Quote
  #15  
Old 03.07.2015, 14:49
Carlos R's Avatar
Forum Legend
 
Join Date: Dec 2009
Location: Roundn'about Basel
Posts: 7,237
Groaned at 105 Times in 95 Posts
Thanked 9,933 Times in 4,177 Posts
Carlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond reputeCarlos R has a reputation beyond repute
Re: mortgage, what's the worst case?

Quote:
View Post
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.
That's OK. Therapy is paying off and am no longer bitter...
Reply With Quote
This user would like to thank Carlos R for this useful post:
  #16  
Old 03.07.2015, 14:53
st2lemans's Avatar
Forum Legend
 
Join Date: Dec 2010
Location: Lugano
Posts: 29,003
Groaned at 1,992 Times in 1,508 Posts
Thanked 34,452 Times in 16,384 Posts
st2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond repute
Re: mortgage, what's the worst case?

Quote:
View Post
Some mortgages now are so low, that the running costs are higher per month than the mortgage!
More than 50% higher in our case!

Tom
Reply With Quote
  #17  
Old 03.07.2015, 14:53
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 18,712
Groaned at 356 Times in 285 Posts
Thanked 18,415 Times in 9,939 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, what's the worst case?

Quote:
View Post
is it really that bad?

even at these ridiculous valuations, you are talking about a 2.24% yield that is inflation-indexed. though not really considered an worthwhile investment for property, it is still a better yield than many stocks.

a 43% capital gain already and the opportunity of a tax free exit (UK). with leverage, the gain is probably 3x the investment.
Your assuming a sale at the price in question, looking at sales in the last 7 years I see only 3 sales above £600k, I think she will be lucky to make any profit at all after stamp duty & fees.
Reply With Quote
  #18  
Old 03.07.2015, 14:54
Banned
 
Join Date: Jul 2015
Location: Aargau
Posts: 846
Groaned at 322 Times in 159 Posts
Thanked 324 Times in 229 Posts
plumtree is considered unworthyplumtree is considered unworthyplumtree is considered unworthyplumtree is considered unworthy
Re: mortgage, what's the worst case?

Quote:
View Post
Eddie, the average Swiss has a very different notion of the value of home ownership than the average American does. According to a study I saw some years ago only 30% of the Swiss own their homes (10% in KT ZH). There are many reasons for this, not the least is the need for several hundred thousand upfront to make the deposit on a million plus home. (A million plus in my area is not a luxury home, rather something that would fall on the 'small starter home, in need of TLC' in US terms). But it's not just finances.

Switzerland is a country of renters, there is not the same intrinsic value placed on owning your own for walls, it is not considered a social good, something all should aspire to, as it is in the US.
That0s right. In Switzerland it is apparently now (2013) around 44%, but I too had read only recently that it was around 33% (but those were the figures for 2004). Nevertheless, it is still the lowest in Europe behind Germany who are the next lowest with 52%.

Move out of the city and house prices come down, making the 20% easier to attain.

Rents are sky high, but will remain so if people are prepared to pay them.
Reply With Quote
  #19  
Old 03.07.2015, 14:59
Phil_MCR's Avatar
Forum Legend
 
Join Date: Oct 2009
Location: Basel
Posts: 13,835
Groaned at 271 Times in 177 Posts
Thanked 16,951 Times in 7,172 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, what's the worst case?

Quote:
View Post
Your assuming a sale at the price in question, looking at sales in the last 7 years I see only 3 sales above £600k, I think she will be lucky to make any profit at all after stamp duty & fees.
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.
Reply With Quote
  #20  
Old 03.07.2015, 15:01
AbFab's Avatar
Forum Legend
 
Join Date: Sep 2006
Location: Zürich
Posts: 7,779
Groaned at 329 Times in 223 Posts
Thanked 10,777 Times in 3,750 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, what's the worst case?

Quote:
View Post
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.
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...
Reply With Quote
Reply




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
Mortgage? Which bank offers the best mortgage rates? fashionister Finance/banking/taxation 46 20.01.2020 14:00
Subletting a sublet -- What's the worst that can happen? SK12 Housing in general 11 05.09.2011 09:46
what to put in the 20% downpayment or collateral for mortgage jrm Finance/banking/taxation 7 09.10.2010 10:18
What is the worst thing you would like to do? PlantHead General off-topic 82 15.03.2010 18:03
What's your worst present PlantHead General off-topic 48 03.11.2007 10:32


All times are GMT +2. The time now is 06:27.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0