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Old 04.11.2016, 00:18
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Mortgages

I'm at the initial stages of considering a move to Switzerland with family.

Obviously we'd rent initially. I'm trying to get a feel for the property market though. What is the maths on mortgages? How do lenders calculate?

Any useful links appreciated.
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Old 04.11.2016, 04:21
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Re: Mortgages

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I'm at the initial stages of considering a move to Switzerland with family.



Obviously we'd rent initially. I'm trying to get a feel for the property market though. What is the maths on mortgages? How do lenders calculate?



Any useful links appreciated.


20% min deposit. They Assume interest rates of 5% & repair costs of 1%. If the total is less than 30% of your earnings they will lend the money.
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Old 04.11.2016, 08:22
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Re: Mortgages

I'm not recommending them, but these guys give a good summary: https://www.postfinance.ch/en/priv/prod/mortg.html
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Old 04.11.2016, 09:35
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Re: Mortgages

Thanks.

What's generally max term and do age limits apply? Is interest only allowed?


Did I read right that you can offset interest payments against tax? Presumably not capital repayment?
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Old 04.11.2016, 09:42
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Re: Mortgages

Also, and apologies for the dumb questions, but do I read right that you can do 10% of the deposit in shares?
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Old 04.11.2016, 09:50
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Re: Mortgages

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Also, and apologies for the dumb questions, but do I read right that you can do 10% of the deposit in shares?
99.99% of questions have been answered on here already - use the search function (actually do advanced search and use google)

For specific lending criteria consult the mortgage pages of the websites of the main banks.
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Old 04.11.2016, 09:52
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Re: Mortgages

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Is interest only allowed?
If you put down 35%, yes.

Tom
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Old 04.11.2016, 09:58
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Re: Mortgages

Please use this forum's search function where we have covered these matters in great detail over the years.

Importantly you will also see that you should not consider buying unless you intend staying for at least 10 years - and it will likely take 2 years to find a suitable property to buy...
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Old 04.11.2016, 10:09
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Re: Mortgages

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Also, and apologies for the dumb questions, but do I read right that you can do 10% of the deposit in shares?

The market here is very different from London.

Rent a house/appartement for a year, see if you like it here, get a relation going with a bank and then look to buy if you like it.

Interest only, sure, depending on your circumstances

10% in shares, whay should the bank hold on to your risk ?

20% is about min down payment not more than 10% can come from your pension fund providing you fulfiull certain criteria, main home, no renting...

You need to live here a while in order for you to make a balanced decision as to whether buying is for you or not, depending how long you want to live here, and in which area.

I presume you are not a cash buyer as you are asking all these relatively standard questions.
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Old 04.11.2016, 11:30
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Re: Mortgages

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I'm not recommending them, but these guys give a good summary: https://www.postfinance.ch/en/priv/prod/mortg.html
Just curious -- why are you not recommending them? I am also looking into mortgages and so far have done all my finances at Post.
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Old 04.11.2016, 11:55
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Re: Mortgages

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Just curious -- why are you not recommending them? I am also looking into mortgages and so far have done all my finances at Post.
Not making a recommendation is not the same as saying it's not recommended.
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Old 04.11.2016, 21:05
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Re: Mortgages

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Thanks.

What's generally max term and do age limits apply? Is interest only allowed?


Did I read right that you can offset interest payments against tax? Presumably not capital repayment?
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If you put down 35%, yes.

Tom
Not necessarily. We only put down 20% and we have an interest only mortgage, recently renewed.

Xenophanes, two things to note. First yes, interest payments can be claimed on your tax returns as can the amount of the mortgage itself. The Swiss have a system whereby they work out the theoretical rent and value of your property which is included on your returns so the interest/mortgage offset these. For us it works quite well as we end up with a negative figure for the wealth side of our return, but obviously every person will have different figures. On the negative side, Swiss mortgages are never paid off.

Second, unlike in the UK and other countries property spectulation is discouraged so don't expect to buy a property and then change it again in a few years' time. If you do, then you could be hit with a hefty Capital Gains tax on any profit you make - often 50%+ if selling within 5 years of purchase. The figures go down the longer you own the property. And if you do use some of your pension fund that will have to be paid back if you sell up and don't buy another property here.

That is why the advice is to make very sure that you want to make Switzerland your long term home before you buy. Rushing in and buying straightaway could cost you an arm and a leg if you're not careful. If, after a few years here, you do decide to buy then look for your "forever" home - because that is likely what it will be. The place you live in for the rest of your lives.

Edit: There are a couple of books you might be interested in obtaining. "Living and Working in Switzerland" and its sister edition "Buying and Renting in Switzerland". You can order them via your local bookshop or on the internet.

Last edited by Medea Fleecestealer; 04.11.2016 at 21:06. Reason: Added books info
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Old 05.11.2016, 00:26
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Re: Mortgages

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Not necessarily. We only put down 20% and we have an interest only mortgage, recently renewed.

Xenophanes, two things to note. First yes, interest payments can be claimed on your tax returns as can the amount of the mortgage itself. The Swiss have a system whereby they work out the theoretical rent and value of your property which is included on your returns so the interest/mortgage offset these. For us it works quite well as we end up with a negative figure for the wealth side of our return, but obviously every person will have different figures. On the negative side, Swiss mortgages are never paid off.

Second, unlike in the UK and other countries property spectulation is discouraged so don't expect to buy a property and then change it again in a few years' time. If you do, then you could be hit with a hefty Capital Gains tax on any profit you make - often 50%+ if selling within 5 years of purchase. The figures go down the longer you own the property. And if you do use some of your pension fund that will have to be paid back if you sell up and don't buy another property here.

That is why the advice is to make very sure that you want to make Switzerland your long term home before you buy. Rushing in and buying straightaway could cost you an arm and a leg if you're not careful. If, after a few years here, you do decide to buy then look for your "forever" home - because that is likely what it will be. The place you live in for the rest of your lives.

Edit: There are a couple of books you might be interested in obtaining. "Living and Working in Switzerland" and its sister edition "Buying and Renting in Switzerland". You can order them via your local bookshop or on the internet.
Thanks, that's really useful. And yes, we do plan on making Switzerland a long-term base.
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Old 05.11.2016, 00:39
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Re: Mortgages

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The Swiss have a system whereby they work out the theoretical rent and value of your property which is included on your returns so the interest/mortgage offset these.
It's a common fallacy to think that these two things are related to each other. They are totally independent.

Hypothetical/actual rent is always added to your tax income base, regardless of your mortgage situation. And interests on any loan, not just mortgage, can be deducted - one nice way to think about it is that your mortgage interest rate is essentially discounted by your marginal tax rate.

Swiss' hypothetical rent is actually sort of like a fairer version of property tax, which many countries in the world have in one form or another. You pay less if you earn less.

Another interesting thing to mention is that repairs and renovations are to a large extent fully tax deductible. This helps to somewhat offset the large capital gains taxes in a sale.
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Old 05.11.2016, 03:27
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Re: Mortgages

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Thanks, that's really useful. And yes, we do plan on making Switzerland a long-term base.
Good luck - it is quite ambitious if you have never lived in CH but if you have, and also have permanent settlement visa/citizenship status, then it makes sense. If you have a B permit and have never lived here, then all I can say is I hope it works out somehow!
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Old 05.11.2016, 05:09
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Re: Mortgages

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Good luck - it is quite ambitious if you have never lived in CH but if you have, and also have permanent settlement visa/citizenship status, then it makes sense. If you have a B permit and have never lived here, then all I can say is I hope it works out somehow!
Just be patient and give it time it is really very simply to buy even on a B Permit and sell making a profit BUT just be aware that selling short time incurs a high capital gain but once you get beyond 5 years then it reduces to an acceptable level.

Also treat the majority of posters like the one quoted here with a grain of salt as the EF is full of negative people
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Old 05.11.2016, 09:58
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Re: Mortgages

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It's a common fallacy to think that these two things are related to each other. They are totally independent.

Hypothetical/actual rent is always added to your tax income base, regardless of your mortgage situation. And interests on any loan, not just mortgage, can be deducted - one nice way to think about it is that your mortgage interest rate is essentially discounted by your marginal tax rate.

Swiss' hypothetical rent is actually sort of like a fairer version of property tax, which many countries in the world have in one form or another. You pay less if you earn less.

Another interesting thing to mention is that repairs and renovations are to a large extent fully tax deductible. This helps to somewhat offset the large capital gains taxes in a sale.
Not saying they're related, just using the fact of the theoretical rent/value which is "balanced" if you like by the interest/mortgage.

Xenophanes be aware that initially you'll be taxed at source so won't be filling in a tax return every year. Only if you earn over 120,000 a year or get a C permit would you switch to doing a return. Sometimes people holding a B permit can ask to do a return, but it's up to the individual canton where you live to allow it or not.
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Old 05.11.2016, 10:26
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Re: Mortgages

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If you put down 35%, yes.

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Not necessarily. We only put down 20% and we have an interest only mortgage, recently renewed.
Putting down 35% also (generally) means that one avoids the second Hypothek.

This is something that often gets lost in the discussion of interest rates. The low rates we bandy about are for the first Hypothek, up to 65% of the property value. The second Hypothek covers the additional loan, usually the additional 15% if you are only putting down 20%. That second Hypothek is generally at a higher rate.

Putting down 35% means that, as the second Hypo is not needed, you can save a significant amount. Whether that translates into real savings for you depends on your individual investment and tax situation.

Of course, YMMV. First and second Hypotheke are usual practices across the market, but you and your bank can negotiate other terms.
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Old 05.11.2016, 11:16
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Thanks, that's really useful. And yes, we do plan on making Switzerland a long-term base.
Have you lived in CH before? Make sure it's the right fit for all of your family.
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Old 05.11.2016, 12:14
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Re: Mortgages

Visited but never lived. The plan is eventually to be peregrinating around Europe, staying part of the year in Switzerland.
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