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Old 21.01.2021, 19:09
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Buying an house in Switzerland

I recently got the idea to have more information about having a loan from the bank to buy an house. I talked with a bank employee and they proposed me a loan for 10 years. The strange things is that at the end of the period I will not pay back all the loan and part of the house will be owned by the bank.

How much is common this in Switzerland? What are the pro and cons? I hope the bank would not be able to kick me out whenever they want.


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Old 21.01.2021, 19:17
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Re: Buying an house in Switzerland

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I recently got the idea to have more information about having a loan from the bank to buy an house. I talked with a bank employee and they proposed me a loan for 10 years. The strange things is that at the end of the period I will not pay back all the loan and part of the house will be owned by the bank.

How much is common this in Switzerland? What are the pro and cons? I hope the bank would not be able to kick me out whenever they want.


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The loan is fixed for ten years. Then you need to take another one out - with the same bank, or a different one.
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Old 21.01.2021, 19:20
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Re: Buying an house in Switzerland

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The loan is fixed for ten years. Then you need to take another one out - with the same bank, or a different one.
No, they told me that I do not have to repay all the loan
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Old 21.01.2021, 19:22
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Re: Buying an house in Switzerland

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No, they told me that I do not have to repay all the loan
Thats why you need to agree a fix or go for a floating rate till you sell the house.
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Old 21.01.2021, 19:24
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Re: Buying an house in Switzerland

That's mean when I sell I have to payback the bank right?
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Old 21.01.2021, 19:29
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Re: Buying an house in Switzerland

Here mortgages are rarely paid off since there's a lot of tax advantages in having one. And yes, of course you have to pay the bank back if you sell.
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Old 21.01.2021, 19:32
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Re: Buying an house in Switzerland

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That's mean when I sell I have to payback the bank right?
When you wish to sell you sell, until then you need a loan.
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Old 21.01.2021, 19:40
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Re: Buying an house in Switzerland

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Here mortgages are rarely paid off since there's a lot of tax advantages in having one. And yes, of course you have to pay the bank back if you sell.
Tax advantages having a loan?
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Old 21.01.2021, 19:43
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Re: Buying an house in Switzerland

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Tax advantages having a loan?
Interest is tax deductible, benefit in kind of living in the house is taxed.
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Old 21.01.2021, 19:54
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Re: Buying an house in Switzerland

in addition to tax advantages, at less than 1% interest you could do much more with your money to make more than 1% return on it.
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Old 21.01.2021, 20:03
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Re: Buying an house in Switzerland

Here’s how it works.

You find a home you would like to buy. Negotiate the best price you can.

You need a 20% down payment. But this needs to be your own money, not a bank loan.

The bank may loan you the remaining 80%. But will expect you to pay the interest and perhaps a 1 to 2% amortisation. At least for a few years while you build up equity.

You can deduct the interest paid from your taxes but some of this will be offset by benefit in kind. This is Switzerland, nothing is ever simple.
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Old 21.01.2021, 21:15
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Re: Buying an house in Switzerland

Or 35% over 2.5 million (theoretically although this is negotiable to a point).
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Old 21.01.2021, 21:16
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Re: Buying an house in Switzerland

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You can deduct the interest paid from your taxes but some of this will be offset by benefit in kind. This is Switzerland, nothing is ever simple.
The food's quite simple.
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Old 21.01.2021, 22:06
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Re: Buying an house in Switzerland

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The food's quite simple.
you haven't been yet to the restaurant kitchen
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Old 21.01.2021, 22:11
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Re: Buying an house in Switzerland

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Tax advantages having a loan?
The way it works here is that you have to put the tax value of your property and a theoretical rent (if you don't actually rent it out) on your tax return. The mortgage and interest from mortgage help to offset these figures on your wealth tax.

For example our house has a tax value of CHF191,000 and theoretical rent of CHF10,244. Our mortgage is CHF250,000 and interest is CHF4,068. So we end up with a negative figure for wealth tax because our mortgage is more than the tax value of the house. Don't ask me why the figures are different. All I know is I had to fill in a form for the tax office with things like liveable space in the house, were we near a fire hydrant, do we benefit from street lighting, etc, etc. Tax office then gave us that figure when they worked out our tax bill.
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Old 21.01.2021, 22:21
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Re: Buying an house in Switzerland

That’s a lot of interest!
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Old 21.01.2021, 22:23
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Re: Buying an house in Switzerland

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The strange things is that at the end of the period I will not pay back all the loan and part of the house will be owned by the bank.
You put down, say 200K. You get a mortgate for 800K for ten years. After ten years, you owe (say) 750K to bank because you've paid off 5K per year.

You still owe the bank 750K. They still want the interest on that loan. If you don't pay, they take the house and throw you out.

So what most people do is take out another mortgage.
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Old 21.01.2021, 22:24
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Re: Buying an house in Switzerland

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No, they told me that I do not have to repay all the loan
You don't. But you DO have to pay interest on the loan.
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Old 21.01.2021, 22:32
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Re: Buying an house in Switzerland

While it isn‘t what most people do, there is nothing to stop you amortising the mortgage just like you would in other countries. The bank‘s don‘t like you doing it, as they much prefer to have you pay interest in perpetuity.

There are tax benefits from having the loan, in so far as the interest is tax deductible, however it‘s a fallacy to think this saves you money, as you still have to pay the interest.

As mentioned by someone else, the advantage this system brings is that you should be able to generate a better investment return from the equity market than the interest is costing you. This is obviously not guaranteed.
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Old 21.01.2021, 22:44
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Re: Buying an house in Switzerland

Where people save money is when the interest and any amortisation is less than you would pay in rent.

We likely could rent our home for two to three times what we pay in interest.
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