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Old 14.10.2019, 20:35
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Buying in Valais -- my plan. I have questions and looking to know opinions

Hi all,

I am new in Valais and plan to stay for at least 3 years. So I am considering to buy an apartment in the vicinity of the highway, somewhere between Monthey and Sierre. It would be the first time I buy housing so I have many questions, most related to Switzerland and my situation, and I was hoping you guys could give me some useful inputs.

My situation in a few points:
  1. 30yo from Spain
  2. B permit
  3. Fixed salary (85k) but my contract is renewed annually
  4. I estimate I would be buying something around 400k and I have 20% of that money available
  5. I'm not sure that I will want to stay in Valais in 3 years time so I think I might rent the apartment after that (I might move to a different country or canton)
I am basically wondering if it's worth it, since my current horizon is 3 years which may not be that long a time window (I'm just too tired of giving money to landlords).

I also wonder about the likelihood of getting a loan, given my situation, and how much interest I could expect to pay on it. My father is a retired man with a good nest egg who lives in another canton with a C permit so I wonder if he could serve as a guarantor of some sort that would facilitate the loan.

In case I leave Switzerland after 3 years, how would it work, if I do decide to rent out the flat? It feels weird to me to own property in a country where I don't live but I guess it is not a rare situation. I imagine I would be taxed extra on whatever income I get from the rent because it would not be my main residence.

Also, any opinion, in general, about buying in Valais?

Thanks!
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Old 14.10.2019, 20:41
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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Hi all,

I am new in Valais and plan to stay for at least 3 years. So I am considering to buy an apartment in the vicinity of the highway, somewhere between Monthey and Sierre. It would be the first time I buy housing so I have many questions, most related to Switzerland and my situation, and I was hoping you guys could give me some useful inputs.

My situation in a few points:
  1. 30yo from Spain
  2. B permit
  3. Fixed salary (85k) but my contract is renewed annually
  4. I estimate I would be buying something around 400k and I have 20% of that money available
  5. I'm not sure that I will want to stay in Valais in 3 years time so I think I might rent the apartment after that (I might move to a different country or canton)
I am basically wondering if it's worth it, since my current horizon is 3 years which may not be that long a time window (I'm just too tired of giving money to landlords).

I also wonder about the likelihood of getting a loan, given my situation, and how much interest I could expect to pay on it. My father is a retired man with a good nest egg who lives in another canton with a C permit so I wonder if he could serve as a guarantor of some sort that would facilitate the loan.

In case I leave Switzerland after 3 years, how would it work, if I do decide to rent out the flat? It feels weird to me to own property in a country where I don't live but I guess it is not a rare situation. I imagine I would be taxed extra on whatever income I get from the rent because it would not be my main residence.

Also, any opinion, in general, about buying in Valais?

Thanks!
You will have to increase your deposit from 20% to about 35% for a rental property & you can't use any pension fund for the deposit (you probably are not doing so)

You can't rent with a B permit, however once you have no permit you can rent it out.
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Old 14.10.2019, 20:41
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

If you make a gain on selling it after 3 years you´ll probably have to pay tax on that.

Not forgetting that owning property probably gets you to have to file your taxes yearly.

From my perspective, with a slow slow market in Switzerland and your limited time span, I wouldn´t recommend it. Not sure if you will get a loan with that income?
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Old 14.10.2019, 20:46
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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You will have to increase your deposit from 20% to about 35% for a rental property & you can't use any pension fund for the deposit (you probably are not doing so)

You can't rent with a B permit, however once you have no permit you can rent it out.

The idea is to buy and live there for (at least) 3 years, so I guess it's not considered to be for rental, right?


I would only rent it out after leaving the country, i.e. I would have no permit anymore.
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Old 14.10.2019, 20:48
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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The idea is to buy and live there for (at least) 3 years, so I guess it's not considered to be for rental, right?


I would only rent it out after leaving the country, i.e. I would have no permit anymore.
It's not a rental & you have been lent money on those terms, change the use & you are in breach of your mortgage agreement. You will need to refinance so don't have any fixed rates past the date you plan to leave. It will cost you the entire interest left to pay on the fix to get out.
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Old 14.10.2019, 20:51
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

@roegner I would not be selling the apartment but keep it and rent it out. The idea would be to buy, live there for at least 3 years and then rent it out possibly until I decide to come back and live here.

Actually my partner (not married) would add to the gross income (we'd take a loan together). That would make up about 150k per year.
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Old 14.10.2019, 20:58
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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@roegner I would not be selling the apartment but keep it and rent it out. The idea would be to buy, live there for at least 3 years and then rent it out possibly until I decide to come back and live here.

Actually my partner (not married) would add to the gross income (we'd take a loan together). That would make up about 150k per year.
As FMF said, 20% is not enough plus the other clauses on the mortgage agreement for private use (not rental).

Will your partner then also be responsible for the mortgage as in you buy it together? Better check with the banks if they go for your scenario; they want people to be liable for the amount lent.
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Old 14.10.2019, 21:05
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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As FMF said, 20% is not enough plus the other clauses on the mortgage agreement for private use (not rental).

Will your partner then also be responsible for the mortgage as in you buy it together? Better check with the banks if they go for your scenario; they want people to be liable for the amount lent.

What would be "the other clauses on the mortgage agreement for private use"?


Yes, my partner would also be responsible, we would buy the apartment together. I should check with the banks indeed but I'm first trying to see if it's worth considering even going there
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Old 14.10.2019, 21:05
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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It's not a rental & you have been lent money on those terms, change the use & you are in breach of your mortgage agreement. You will need to refinance so don't have any fixed rates past the date you plan to leave. It will cost you the entire interest left to pay on the fix to get out.

Thanks for this piece of info! In that case I would finish paying the mortgage and only then rent it out.
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Old 14.10.2019, 21:09
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

Do the math: your disposable income together per month against the interest on 65% of the 400 k plus cost for insurance, electricity, water, maintenance etc etc

Do not forget that you need money for a notary, probably taxes (is there a Grundsteuer?), having the documentation done, all this can cost a lot.
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Old 14.10.2019, 21:15
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

@roegner Do you have a rough idea of how much interest I could expect on the 65%?
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Old 14.10.2019, 21:23
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

That depends on you, most banks give a rough indication.

If you want to leave in 3 years, you would have to remortgage at a higher interest. If you leave for another country, can you still pay that?
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Old 14.10.2019, 21:50
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

The Swiss market is not for short term buying and quick gains
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Old 14.10.2019, 22:09
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

It doesn’t really help your situation because you’re in a different Kanton but if you want an idea of how much tax you might pay on a property price gain, the following link might help:

https://brixel.ch/grundstueckgewinns...chner/zuerich/
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Old 15.10.2019, 10:05
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

the golden rule for real estate in Switzerland is to buy only if you have long term prospects of living there and most important that you liked the property. it is completely different from other markets as there are too many regulations around taxes, permits, capital gains and you can be sure that in the end you will have more hassle in maintaining a rental property than the financial benefits out of it. And you cannot make quick money (if any at all) by investing in the Swiss market. And it is hard to sell something unless the property is in a prime area. with your salary levels i suggest not to go for such investments as you may end up in financial troubles if you are unable to rent it out after you leave the country but still have to pay the mortgage. if you sell quickly you end up paying too high taxes on the capital gains. so the market is really made for buy and live there.


cheers
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Old 15.10.2019, 11:09
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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Thanks for this piece of info! In that case I would finish paying the mortgage and only then rent it out.
Let me warn you that your expectations that you can save 400K in 3 years (to pay the mortgage) are completely unrealistic and impossible,given your salary levels. Search other threads on this forum for cost of living in Switzerland, if you have never lived here before.
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Old 15.10.2019, 12:20
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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It's not a rental & you have been lent money on those terms, change the use & you are in breach of your mortgage agreement. You will need to refinance so don't have any fixed rates past the date you plan to leave. It will cost you the entire interest left to pay on the fix to get out.
I am asking myself the same question.
If the rent cashed in for the apartament is twice or three times the monthly installment for the credit, what will the bank do? Is this a problem since the credit is being repaid every month on time?
Why need to pay the entire interest to get out? If for example the mortgage is for 10 years and one remains in Switzerland 3 years, what is the problem of paying back for 7 years from the rent?
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Old 15.10.2019, 12:29
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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I am asking myself the same question.
If the rent cashed in for the apartament is twice or three times the monthly installment for the credit, what will the bank do? Is this a problem since the credit is being repaid every month on time?
Why need to pay the entire interest to get out? If for example the mortgage is for 10 years and one remains in Switzerland 3 years, what is the problem of paying back for 7 years from the rent?

The bank perceives a higher risk and re-evaluates the rates and the risks


In English this means they can and will screw you for more payment.
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Old 15.10.2019, 12:37
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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Yes, my partner would also be responsible, we would buy the apartment together. I should check with the banks indeed but I'm first trying to see if it's worth considering even going there
Personally I would never ever opt for co-ownership. While your relationship lasts it won't make a difference who owns it, but if you break up then co-ownership makes separating even more complicated and difficult. Co-ownership can give each of you the option to make the other's life hell if things go really sour, and there's a significant risk of that happening.

As for your job, being on a revolving one-year contract may render you altogether ineligible for a mortgage. Perhaps enquire with a few banks what they have to say about that.
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Old 15.10.2019, 12:38
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Re: Buying in Valais -- my plan. I have questions and looking to know opinions

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I am asking myself the same question.
If the rent cashed in for the apartament is twice or three times the monthly installment for the credit, what will the bank do? Is this a problem since the credit is being repaid every month on time?
Why need to pay the entire interest to get out? If for example the mortgage is for 10 years and one remains in Switzerland 3 years, what is the problem of paying back for 7 years from the rent?
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The bank perceives a higher risk and re-evaluates the rates and the risks

That and much more difficult to get hold of you when you do not pay if you live abroad. Apart from that, will you still have the salary abroad to repay a Swiss mortgage? Housing prices here are quite high compared to other countries
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