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Old 02.11.2015, 12:01
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Buying a house - can we borrow more than the house price?

Apologies if this has been asked before. Have looked on FAQ and can't see anything.

We are looking to buy a house and have found one we like. However we would like to ask the bank for a loan above the price we will be offering, in order to do some work on the house and pay for the legal fees. Does anyone know if this is possible? Do banks only loan for the price of the house and then any extra costs have to come from your own cash? Nb. we have the 20% deposit for the price of the house.

I know the obvious thing would be to approach the bank but just wondering if anyone could share their experience before we make anything 'official'.

Thanks in advance.
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Old 02.11.2015, 12:07
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Re: Buying a house - can we borrow more than the house price?

According to Finanzmonitor, a bank will not finance a housing loan at 100% and that you'll need to put down 20%. This is a key part of the article:

"Durch den Zugriff auf die Pensionskasse war es vielen Schweizern möglich, sich den Traum vom Wohneigentum zu ermöglichen. Das ist auch heute noch möglich. Allerdings haben die Banken im Rahmen einer Selbstregulierung per Juli 2012 beschlossen, dass folgende Kriterien gelten:
  • Mindestens 10% „echtes“ Eigenkapital, welches nicht aus der Pensionskasse stammt
  • Reduktion der Belehnung auf 2/3 des Belehnungswerts innerhalb von 20 Jahren. Per 1. September 2014 gilt eine Frist von 15 Jahren.
Hinzu kommt noch die alte Regel, dass Banken nur bis 80% des Kaufpreises finanzieren. Das bedeutet, dass also im Minimum 20% Eigenkapital vorhanden sein müssen, und dass im Minimum 10% des Eigenkapitals nicht aus der Pensionskasse stammen darf."

http://www.finanzmonitor.com/immobil...-eigenkapital/
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Old 02.11.2015, 12:14
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Re: Buying a house - can we borrow more than the house price?

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Apologies if this has been asked before. Have looked on FAQ and can't see anything.

We are looking to buy a house and have found one we like. However we would like to ask the bank for a loan above the price we will be offering, in order to do some work on the house and pay for the legal fees. Does anyone know if this is possible? Do banks only loan for the price of the house and then any extra costs have to come from your own cash? Nb. we have the 20% deposit for the price of the house.

I know the obvious thing would be to approach the bank but just wondering if anyone could share their experience before we make anything 'official'.

Thanks in advance.
Our bank (GLKB) offered to give us a renovation loan at the same time. We didn't pursue that so no idea whether it would have been separate or bundled with the mortgages, nor what the rates would have been like - but yes, apparently the notion does exist.
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Old 02.11.2015, 12:16
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Re: Buying a house - can we borrow more than the house price?

If you're rearly serious in wanting to buy a house you shoukd really have enough money put aside to be able to pay the 20% deposit ( or 10% cash plus 10% from pension pot) which is the minimum required and any associated legal fees.
This is the very minimum I would recommend but ideally you should also have a more as an emergency/fallback fund.

Buying a house is not cheap and if you don't have those funds already I would think twice about jumping in and purchasing a property.

Having said that you may (depending on your circumstances/income) be able to get an additional loan on top of the mortgage for renovation costs but it won't be at the same rate of interest as the mortgage .
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Old 02.11.2015, 12:20
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Re: Buying a house - can we borrow more than the house price?

Depending where you live, you will also need to borrow about 5%,
~ 1% for the legal transfer fees
~ 2% tax to the city
~ 2% tax to the canton

Unless you have some extra solid collateral, the bank will not lend this 5% to you. Maybe a parent can borrow the 5% for the fees and taxes for you?

If I was financially stretched, I would not buy a property. It is very easy to lose your job and then cannot pay the mortgage. The bank then steps in and sells the house for 80% of the price, and you are left with nothing.
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Old 02.11.2015, 12:23
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Re: Buying a house - can we borrow more than the house price?

Thanks for your replies. Unfortunately I don't speak German.

We are serious about buying somewhere and we have the cash available for the deposit. However instead of buying at the maximum budget (for what we could offer a 20% deposit on) we would prefer to buy somewhere cheaper - use the same deposit (so over 20%) but borrow a bit more to use for renovations. Sorry I am not sure how clear i am being.

Well noted re: the interest rates. thanks.
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Old 02.11.2015, 12:25
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Re: Buying a house - can we borrow more than the house price?

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If I was financially stretched, I would not buy a property. It is very easy to lose your job and then cannot pay the mortgage. The bank then steps in and sells the house for 80% of the price, and you are left with nothing.
The bank sells the house at auction, the amount received after expenses could be more or less than 80%. If its less than the mortgage the liability remains.
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Old 02.11.2015, 12:31
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Re: Buying a house - can we borrow more than the house price?

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Thanks for your replies. Unfortunately I don't speak German.
FTFY.
https://translate.google.de/translat...%2F&edit-text=
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Old 02.11.2015, 12:33
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Re: Buying a house - can we borrow more than the house price?

Thanks.
I would not consider us financially stretched but we would have to use the majority of our savings for our deposit (isn't that the case for everyone?!). Our mortgage would cost less than our rent today.
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Old 02.11.2015, 12:35
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Re: Buying a house - can we borrow more than the house price?

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Thanks.
I would not consider us financially stretched but we would have to use the majority of our savings for our deposit (isn't that the case for everyone?!). Our mortgage would cost less than our rent today.
Remember if values fall you may be asked to increase your deposit, its different in SWITZERLAND
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Old 02.11.2015, 12:46
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Re: Buying a house - can we borrow more than the house price?

Thanks for the article Mullhollander.
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Old 02.11.2015, 13:21
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Re: Buying a house - can we borrow more than the house price?

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Thanks.
I would not consider us financially stretched but we would have to use the majority of our savings for our deposit (isn't that the case for everyone?!). Our mortgage would cost less than our rent today.
Yes that is the case for the majority of people, I would think.
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Old 02.11.2015, 16:43
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Re: Buying a house - can we borrow more than the house price?

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I know the obvious thing would be to approach the bank but just wondering if anyone could share their experience before we make anything 'official'.
The bank will be able to loan you more if the modifications you intend to do increase the value of your property. You must have everything on paper.
If, for example, you intend to redo the roof be sure to have a quotation ready. The bank may agree to credit that, but you have to keep 20+ % cash ratio intact.
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Old 02.11.2015, 17:13
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Re: Buying a house - can we borrow more than the house price?

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we would like to ask the bank for a loan above the price we will be offering, in order to do some work on the house and pay for the legal fees. Does anyone know if this is possible?
Work on the house, yes, in fact our lender asked if we wanted some extra for renovations.

Legal fees, no. On a 465k purchase, legal fees, taxes, etc. were 18k (last November).

Also, it's not 20/35% of the purchase price, rather 20/35% of what the bank thinks that it's worth. We put down 32% and got a ten year fixed interest only loan, so obviously they think that the amount we borrowed is less than 65% of the value.

Tom
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Old 03.11.2015, 08:25
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Re: Buying a house - can we borrow more than the house price?

Thanks for the replies! Useful info Tom. Cheers.
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