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Old 23.01.2021, 18:15
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Re: Buying an house in Switzerland

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My guess here is that the bank was closing in on the property anyway so the seller was having a last throw of the dice with potential buyers. Either they get to sell it for full price or the banks will take it. No other choice...
He ended up losing the house he lived in as well, business was bad & interest rates were far higher in 2004/5 than they are today in CH. I think Post finance was paying me 2.5% at the time, so mortgage rates would have been 4 times that of today.
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Old 23.01.2021, 22:53
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Re: Buying an house in Switzerland

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He ended up losing the house he lived in as well, business was bad & interest rates were far higher in 2004/5 than they are today in CH. I think Post finance was paying me 2.5% at the time, so mortgage rates would have been 4 times that of today.
it was +3.5-4% ...as far I remember

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Old 24.01.2021, 01:14
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Re: Buying an house in Switzerland

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Any positive experience here?
As a seller or a buyer?
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  #64  
Old 24.01.2021, 09:22
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Re: Buying an house in Switzerland

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It's not a matter how you "look at it" - you need to calculate and all the variables around it. Eyebebee example clearly shows that it could be the other way around and I believe a lot of people are falsely led to believe mortgage is always better.
Ok - so what alternative is better? Eyebebee example assumes that the mortgage is repaid, which for most people is a huge ask.
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Old 24.01.2021, 09:46
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Re: Buying an house in Switzerland

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As a seller or a buyer?
As a buyer. When we looked last time at the property, there was an advert saying that the price is negotiable. Few days later the very same advert disappeared and we thought it was a spam deleted by homegate.ch because someone reported it. Surprisingly, it reappeared few days later with updated photos and this time the fixed price. The comment about the asking price being negotiable was gone. We viewed the place and wanted to make an offer 5% lower but the agent didn’t agree. Or rather said that the owner won’t agree. His commission from sale would be few thousands lower.

The really funny part though, when we arrived at the location, the agent came outside to see what car we drove and when we were taking off our shoes before entering the apartment, he was checking the brand of my shoe. Lol, he was judging our affordability.
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  #66  
Old 24.01.2021, 10:05
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Re: Buying an house in Switzerland

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As a buyer. When we looked last time at the property, there was an advert saying that the price is negotiable. Few days later the very same advert disappeared and we thought it was a spam deleted by homegate.ch because someone reported it. Surprisingly, it reappeared few days later with updated photos and this time the fixed price. The comment about the asking price being negotiable was gone. We viewed the place and wanted to make an offer 5% lower but the agent didn’t agree. Or rather said that the owner won’t agree. His commission from sale would be few thousands lower.

The really funny part though, when we arrived at the location, the agent came outside to see what car we drove and when we were taking off our shoes before entering the apartment, he was checking the brand of my shoe. Lol, he was judging our affordability.
Better to turn up in an old banger, it's none of the agents business what you can afford, he will lie to get you to increase your offer & thus his commission. My last 3 property purchases were paid for in cash, always at least 5% below asking price.
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Old 24.01.2021, 10:46
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Re: Buying an house in Switzerland

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Better to turn up in an old banger, it's none of the agents business what you can afford, he will lie to get you to increase your offer & thus his commission. My last 3 property purchases were paid for in cash, always at least 5% below asking price.
Next time, I will park far away or take a bus.

Importantly though, if you plan to purchase something very soon, get your finances in order first. Make sure that you have specific budget and your mortgage can be pre-approved. In my experience, HypoPlus from comparis is very good. You can drop them all the docs in the drop-box and they can already start inquire based on your search criteria. The sales documentation can be always added in the end.
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Old 24.01.2021, 10:50
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Re: Buying an house in Switzerland

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Ok - so what alternative is better? Eyebebee example assumes that the mortgage is repaid, which for most people is a huge ask.
Better could be to increase your amortization vs interests you pay to the bank. Again doing your own calculation based on your situation and not believing by default that “interest is always better because of tax deductions”.
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Old 24.01.2021, 10:52
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Re: Buying an house in Switzerland

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The really funny part though, when we arrived at the location, the agent came outside to see what car we drove and when we were taking off our shoes before entering the apartment, he was checking the brand of my shoe. Lol, he was judging our affordability.
One of my 'walk away' indicators is becoming increasingly common in this area: Proof of finances is required before you are invited to view the house.

---

Some years ago a farm house was up for sale in my village, the only one to ever come on the market in all the time I have lived here.

There were a good hundred people at the two open houses, requiring the traffic cadets to deal with the cars.

Apparently I didn't get the dress code memo - only those who arrived in a Lamborghini, wearing mink, Louboutins, and a bling-y watch that could be seen from space were thought to be worthy of the agent's time.

Although it was fun to watch those Louboutins struggle through the pig sty.
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Old 24.01.2021, 11:16
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Re: Buying an house in Switzerland

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Ok - so what alternative is better? Eyebebee example assumes that the mortgage is repaid, which for most people is a huge ask.
I think you are confusing the rent vs. Buy calculation with what I am actually demonstrating in my example, which is that the idea that never paying back your mortgage is sold as being financially beneficial „because taxes“, when it actually isn‘t unless:
A) your marginal rate of income tax is over 100%
B) you invest the money you would use for the amortisation and get a higher rate of return than the interest. This is certainly feasible, but it is not without risk and people would do well to remember that we are in the longest bull market of all time

It is also a valid viewpoint that you value liquidity and are prepared to pay interest to maintain it - getting equity out of a property is not as liquid as selling securities, which isn‘t as liquid as holding cash.
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Old 24.01.2021, 11:44
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Re: Buying an house in Switzerland

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I think you are confusing the rent vs. Buy calculation with what I am actually demonstrating in my example, which is that the idea that never paying back your mortgage is sold as being financially beneficial „because taxes“, when it actually isn‘t unless:
A) your marginal rate of income tax is over 100%
B) you invest the money you would use for the amortisation and get a higher rate of return than the interest. This is certainly feasible, but it is not without risk and people would do well to remember that we are in the longest bull market of all time

It is also a valid viewpoint that you value liquidity and are prepared to pay interest to maintain it - getting equity out of a property is not as liquid as selling securities, which isn‘t as liquid as holding cash.
And as I have pointed out more than once on EF - we all need somewhere to live.

This can be facilitated by a mortgage, where one can borrow CHF1million for less than CHF800.- a month for the next 10 years, or by paying rent at say CHF3,000 a month.

After 10 years the mortgage has cost CHF96,000 and if all goes pear-shaped you can sell the property at what you paid for it - or more likely double.

Paying rent over 10 years will have cost CHF360,000 and what have you got to fall back on??

(Lower mortgage interest-only rates may apply and monthly rents may be higher.)

A gross oversimplification, but this charm has worked well for me for over 50 years now...
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Old 24.01.2021, 12:42
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Re: Buying an house in Switzerland

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And as I have pointed out more than once on EF - we all need somewhere to live.

This can be facilitated by a mortgage, where one can borrow CHF1million for less than CHF800.- a month for the next 10 years, or by paying rent at say CHF3,000 a month.

After 10 years the mortgage has cost CHF96,000 and if all goes pear-shaped you can sell the property at what you paid for it - or more likely double.

Paying rent over 10 years will have cost CHF360,000 and what have you got to fall back on??

(Lower mortgage interest-only rates may apply and monthly rents may be higher.)

A gross oversimplification, but this charm has worked well for me for over 50 years now...
Do people just post what they want to post rather than replying to what has been written? I literally wrote in the post you quoted that I am not discussing the rent vs. Buy question.

Incidentally, for a mortgage of CHF 1m you would need a deposit of CHF 250k. If you invest that for 10 years with the 8% return so beloved of this forum (I personally find it aggressive), you would have CHF 531k to fall back on. If you leveraged it, which is effectively what you are doing with at 20% deposit on a property, your returns (and potential losses) could be far higher.

FWIW All I have tried to do here is explain a common and oft-promoted misconception about the tax benefits of a mortgage. I am not an evangelical investor in the financial markets, but neither am I a believer in owning a home at all costs. I believe in using critical thinking, comparing apples with apples, using data and facts whilst understanding that emotions and feeling also play a part. We own with a mortgage our property in Switzerland, a legacy BTL in the UK and have a mixture of actively managed funds, ETF index funds and single stocks in our portfolio. We pay our mortgage in the traditional Swiss way, as I currently believe we can do better than 1% return. If this belief changes, we will look at other options.
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Old 24.01.2021, 13:35
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Re: Buying an house in Switzerland

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Do people just post what they want to post rather than replying to what has been written? I literally wrote in the post you quoted that I am not discussing the rent vs. Buy question.

Incidentally, for a mortgage of CHF 1m you would need a deposit of CHF 250k. If you invest that for 10 years with the 8% return so beloved of this forum (I personally find it aggressive), you would have CHF 531k to fall back on. If you leveraged it, which is effectively what you are doing with at 20% deposit on a property, your returns (and potential losses) could be far higher.

FWIW All I have tried to do here is explain a common and oft-promoted misconception about the tax benefits of a mortgage. I am not an evangelical investor in the financial markets, but neither am I a believer in owning a home at all costs. I believe in using critical thinking, comparing apples with apples, using data and facts whilst understanding that emotions and feeling also play a part. We own with a mortgage our property in Switzerland, a legacy BTL in the UK and have a mixture of actively managed funds, ETF index funds and single stocks in our portfolio. We pay our mortgage in the traditional Swiss way, as I currently believe we can do better than 1% return. If this belief changes, we will look at other options.
Agree. I am a simple mind, so I might be over-simplifying things, but, wouldn't a good exit strategy be the answer to the discussion? (or maybe I am seeing it as an EU-national...)

1. achieving a 8% RoI on stock market investments might prove elusive, unless you are an advanced investor and want to invest part of your own time daily on it (unless is your daily job, that is)
2. The position of the Swiss banks (contrary to the EU ones), allows you to ' not have to care to build up the 1MM' (as you do not have to actually pay the principal, so I can take my ' build up capital (or pro-rata of it) and invest it in whatever I want - stocks...or wine... or personal travel :-)
3. After 10 years (or 15, or 20,or when you decide to move back to your country, or to a ' golden retirement' nest) , considering that you have chosen rightly (location, location, location) and not over-paid for the property, the value of the property will have increased - both because of the natural gentrification of the area, and because of the astute renovations you have undertaken - so you can rent it, to over-cover the interest rates, and (probably) even pay your monthly cost-of-living abroad, or cash out the investment through a sale with a good profit.

Unfortunately, as entrepreneur, my banker told me that my limit would allow only for a garage ownership...but, hey, you have to start somewhere
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Old 24.01.2021, 13:56
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Re: Buying an house in Switzerland

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Agree. I am a simple mind, so I might be over-simplifying things, but, wouldn't a good exit strategy be the answer to the discussion? (or maybe I am seeing it as an EU-national...)

1. achieving a 8% RoI on stock market investments might prove elusive, unless you are an advanced investor and want to invest part of your own time daily on it (unless is your daily job, that is)
2. The position of the Swiss banks (contrary to the EU ones), allows you to ' not have to care to build up the 1MM' (as you do not have to actually pay the principal, so I can take my ' build up capital (or pro-rata of it) and invest it in whatever I want - stocks...or wine... or personal travel :-)
3. After 10 years (or 15, or 20,or when you decide to move back to your country, or to a ' golden retirement' nest) , considering that you have chosen rightly (location, location, location) and not over-paid for the property, the value of the property will have increased - both because of the natural gentrification of the area, and because of the astute renovations you have undertaken - so you can rent it, to over-cover the interest rates, and (probably) even pay your monthly cost-of-living abroad, or cash out the investment through a sale with a good profit.

Unfortunately, as entrepreneur, my banker told me that my limit would allow only for a garage ownership...but, hey, you have to start somewhere
Sure. It depends on your reasons for being here. A couple of points:
8% return comes from some other threads on here and is (from memory) the average return on the S&P 500 since 1970. Past performance is no indicator of future (but it‘s all we have!)
Do not assume your home will go up in value. See my previous point. While homes generally have gone up in value over time, I personally do not see a huge potential for capital appreciation in Switzerland in the future. Interest rates cannot really go any lower, there have been active policy measures to try and contain house price growth and economic situation looks uncertain currently. Speaking against that is the continuing increase in population, the Swiss institutional love of real estate as an asset class (pension funds etc), the need for investment yield and the greater fool theory.

And thanks for the reminder... I forgot to add fine wine to my list of investments. Mainly because win or lose on the financial side, I can sell if it goes up in value (the first growth Bordeaux from excellent vintages should at least) or drink it if it doesn‘t
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Old 24.01.2021, 21:44
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Re: Buying an house in Switzerland

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Purchasing fees: now this is something that is definitely different across cantons, but you will likely need to pay some or all of the notary fees and associated taxes. In addition if you take out a mortgage, you also need to register the document with the notary, which also costs a fortune and (I think) has associated taxes. Anyway, all in all this can be around 5% of the purchase price.
To add a data point on purchasing fees, we have been advised to also 3000 CHF fees for a 1.15 Mn apartment in Baselland (so a lot less than 5% thankfully!)
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Old 26.01.2021, 08:19
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Re: Buying an house in Switzerland

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The only reason we even keep this tiny tranche is that we've been advised to keep the Schuldbrief open to facilitate selling.
I am not sure keeping a Schuldbrief has any impact on selling. We bought a house where the seller had no mortgage but there was a small Schuldbrief. It is possible for a buyer to take this over and increase the amount if necessary. It may also be necessary to adjust the interest rate on the Schuldbrief.

I cannot speak for other cantons but having bought and sold several properties in Aargau, until recently the practice was to sell the existing Schuldbrief at a discount (50% of what a new one would cost) to the buyer. However the current practice is the buyers can acquire it without paying.
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Old 26.01.2021, 22:29
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Re: Buying an house in Switzerland

Financial details aside: My main reason for buying home is having secure place to live in and knowing that no one will throw me out as long as I pay the mortgage.


A lawyer from Mieterverband (asloca) once told me that she was against owning property but after she worked for several years in MV and saw all the disasters when old and helpless people had to move from their rental apartments she bought property and now advises everyone else to do so as well.


You are also much more flexible in customization of the property to your own needs.
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