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Old 14.05.2018, 15:12
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Down Payment Usually Required?

I know that you need a minimum down payment of 20% but did some people on here pay more? 30%, 35%?

I'm trying to get an idea of what they will lend. Not including pension fund downpayments either...

Also, if your income is somewhat unpredictable... is there a percent where they'll pretty much say ok you've got 50% down, we'll loan you the rest...

thanks!
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Old 14.05.2018, 15:20
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Re: Down Payment Usually Required?

I am trying to get the minimum 20% however...
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Old 14.05.2018, 15:21
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Re: Down Payment Usually Required?

If your income is unpredictable they are likely to look at an average, and if it to uncertain if there will be income in the future they are likely to not take that income along when deciding what you can loan, or go under the average when determine your income.

How much you can loan is set by things like Debts, income, capital/security.

Unless you put up a full picture nobody here can even get close to what you can get for a loan/mortgage. Just talk to an advisor/bank to get an idea of your options.
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Old 14.05.2018, 15:28
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Re: Down Payment Usually Required?

Is the 20% assumed to be all cash .. As in not including pension?

Can somebody walk in with no cash and just "put down" the whole deposit in pension fund money?
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Old 14.05.2018, 15:43
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Re: Down Payment Usually Required?

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Can somebody walk in with no cash and just "put down" the whole deposit in pension fund money?
No. At least 10% of the sales price must not be pillar 2 money.
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Old 14.05.2018, 15:43
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Re: Down Payment Usually Required?

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Is the 20% assumed to be all cash .. As in not including pension?

Can somebody walk in with no cash and just "put down" the whole deposit in pension fund money?
A minimum of 10% has to be cash.
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Old 14.05.2018, 16:06
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Re: Down Payment Usually Required?

Also, I was surprised when I talked to a banker recently about a mortgage and the bank would not give me the amount that the numbers added up to on paper. When I asked him why, he said that the amount on paper was based on the current interest rate. The numbers that HE was working with assumed that the interest rate went up something like 4%...
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Old 14.05.2018, 16:27
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Re: Down Payment Usually Required?

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Also, I was surprised when I talked to a banker recently about a mortgage and the bank would not give me the amount that the numbers added up to on paper. When I asked him why, he said that the amount on paper was based on the current interest rate. The numbers that HE was working with assumed that the interest rate went up something like 4%...
Yep, that's the healthy way to do it.

We are all still hoping the interest rates go up any moment
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Old 14.05.2018, 16:48
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Re: Down Payment Usually Required?

It depends on the VALUE, not the SALES PRICE!

Tom
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Old 14.05.2018, 17:08
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Re: Down Payment Usually Required?

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Yep, that's the healthy way to do it.
No, its not healthy. The banker should borrow you money based on your income, the value of the property and the near term interest rate.


I talked to my banker over a decade ago, a year before the financial crisis, and two fully and permanently employed young professionals with decent incomes could not get the credit to finance a pretty humble flat in ZH. Three years or so later was my tax money however good enough to save the Swiss banks that threw money at American consumers financing their homes at 120% betting on ever increasing property prices without the necessary securities.


The healthy way is as so often in between.
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Old 14.05.2018, 17:24
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Re: Down Payment Usually Required?

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No, its not healthy. The banker should borrow you money based on your income, the value of the property and the near term interest rate.
Banks have to follow the law and are legally enforced to calculate with a certain minimum rent.

Rents are now very low, imagine if they triple over the next 5 years and banks handed out max loans to people based on the current rent, and combine such with by then to be expected lower house prices due to the higher rent. It would be a personal disaster for people in such situation.
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Old 14.05.2018, 18:14
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Re: Down Payment Usually Required?

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Banks have to follow the law and are legally enforced to calculate with a certain minimum rent.
It does make sense to calculate the load with theoretical interest rate of 5% for long-term sustainability.
However, the banks should have a bit more brains and approve the mortgage even in the following scenario:
For example, if I'm able to afford 3000/month today I still won't get approved for a 800K mortgage with conventional calculation (because it would mean 40K/year = 3333/month with 5% interest).
But the actual interest at the current 10-year term rate of 1.2% would be only 800/month and then putting 2200/month into the principal repayment would reduce it by 264K over 10 years so at the end I'd owe 536K, translating to 2233/month in interest even with the theoretical 5% rate.

Last edited by theUser; 14.05.2018 at 18:15. Reason: spelling
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Old 14.05.2018, 18:41
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Re: Down Payment Usually Required?

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It does make sense to calculate the load with theoretical interest rate of 5% for long-term sustainability.
However, the banks should have a bit more brains and approve the mortgage even in the following scenario:
For example, if I'm able to afford 3000/month today I still won't get approved for a 800K mortgage with conventional calculation (because it would mean 40K/year = 3333/month with 5% interest).
But the actual interest at the current 10-year term rate of 1.2% would be only 800/month and then putting 2200/month into the principal repayment would reduce it by 264K over 10 years so at the end I'd owe 536K, translating to 2233/month in interest even with the theoretical 5% rate.
If you have the legally demanded income and the house has enough value and you have the down payment I do not think the bank would refuse you your mortgage.

The bank also has to take along amounts for other costs involved with owning a house like maintenance for example. Being able to afford 3K a month according to your own calculations is meaningless to the system.
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Old 14.05.2018, 18:48
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Re: Down Payment Usually Required?

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Banks have to follow the law and are legally enforced to calculate with a certain minimum rent.

Rents are now very low, imagine if they triple over the next 5 years and banks handed out max loans to people based on the current rent, and combine such with by then to be expected lower house prices due to the higher rent. It would be a personal disaster for people in such situation.
I dont get you. Why would the house price go down if the rent goes up... anyways: A bank has to make sure I can pay my monthly installments. A bank does not have to make sure that I never lose any money. My personal risk and personal decision. Other than the legal barriers to make sure people dont take too much credit compared to their income should a bank only be focussed on not losing money, so they need to trust into the securities you offer for the credit. In other words: the house. If the bank does not value Swiss real estate at the price it is currently going for does this tell you more about the Swiss market than anything else.
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Old 14.05.2018, 18:58
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Re: Down Payment Usually Required?

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I dont get you. Why would the house price go down if the rent goes up... anyways: A bank has to make sure I can pay my monthly installments.
Rent == Interest. Something lost in translation from NL to EN.

House price go down when interest goes up as people only want to pay X per month to own a house.
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Old 14.05.2018, 19:17
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Re: Down Payment Usually Required?

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Rent == Interest. Something lost in translation from NL to EN.

House price go down when interest goes up as people only want to pay X per month to own a house.
Not really lost in translation just an error on my side, Dutch for interest is "rente", common mistake I tend to make since it looks so much like "rent". (rent is actually "huur" in Dutch)

But you got what I ment to say
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Old 14.05.2018, 19:19
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Re: Down Payment Usually Required?

It definitely pays to shop around. In our case Raiffeisen were much more flexible than UBS or Credit Suisse -we did not try to bend the the 20% rule, but about how much they were prepared to lend on mortgage 1 rather than mortgage 2 (which has to be paid off before retirement) and the rates which are kind of important
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Old 14.05.2018, 19:25
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Re: Down Payment Usually Required?

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(rent is actually "huur" in Dutch)

But you got what I ment to say
"to rent bikes in Amsterdam", sounds very naughty and kinky .
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Old 14.05.2018, 19:39
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Re: Down Payment Usually Required?

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"to rent bikes in Amsterdam", sounds very naughty and kinky .
Not if you pronounce it correctly (hüür)
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Old 14.05.2018, 19:53
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Re: Down Payment Usually Required?

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"to rent bikes in Amsterdam", sounds very naughty and kinky .
as we Dutch say: you need to learn it first on an old bike
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