Owning your home makes sense. Real estate is a sound financial investment as well as a way of ensuring you have something to leave behind to your loved ones when the time comes. Having a place to call your own, a real family home, is a dream for many people. Yet choosing the right property for your needs and financial situation is not always easy. You have to put a little work into making this dream come true. That’s where the real estate specialist comes in: they can help you find a flat or house, or make the right buy-to-let investment. Below, we provide a few pointers to help you get your property adventure off to a good start!
Choose a specialist to help you achieve your dream
When it comes to house-hunting, there are so many areas where expert help can make all the difference: finding the right home, arranging viewings, setting the right budget, negotiating with banks, assessing whether to defer payment of capital gains tax, bargaining and estimating a purchase price. Becoming a homeowner is a step-by-step process that requires a thorough understanding of the market and awareness of all the latest developments in real estate.
At Cardis Sotheby’s International Realty, we go the extra mile to turn your property dreams into reality. Our first piece of advice is always the same: come and see us! Our doors are always open and our team will be happy to help. But even before you drop by, you can get started by taking the steps below…
Locate your property
As estate agents like to say: “Location, location, location”. The specific location of a property will have a big impact on its final cost. Buyers sometimes have to revise their expectations, depending on the size of the deposit they are able to put down. Once you’ve picked a location, you’ll need to raise the necessary funds. There are a variety of ways to do this in Switzerland.
Raise a deposit
Raising a deposit is a basic step in buying a property, yet many would-be homeowners find it a scary prospect. There’s no need to worry: you just need to establish how much you can afford and proceed accordingly. When it comes to the deposit, you have a number of options.
Pillar 2 of the Swiss pension system (occupational benefits insurance) can form the basis for financing a property purchase: funds paid into an occupational pension scheme can be put towards buying a home. However, at least 10% of the deposit has to come from other sources. These can be personal savings, pillar 3 (private pensions) or an inheritance. You can also choose a buy-to-let property that pays for itself, to cover your monthly mortgage repayments. In Switzerland, it’s common for people to reach out to their family, employer or friends for help at this stage.
So you have a wide range of methods to choose from when it comes to your deposit. At the end of the day, the solution is never far away, and you may even find that your loved ones can give you a helping hand to get on the property ladder.
Switzerland encourages homebuyers
One of the many advantages of buying in Switzerland is the country’s favourable fiscal policy, which allows you to deduct debt interest and repayments from your tax bill. Plus we have some of the lowest interest rates in Europe… Homebuyers are certainly made to feel welcome here!
The mortgage loan
Below is an example of the calculations that banks perform when assessing your ability to finance your mortgage :
- Theoretical interest rate: 5%
- Annual repayments: 1%
- Maintenance costs: 1%
This total should in theory not exceed 1/3 of your couple’s total gross income.
Basic finance rules, mortgage types and tax matters
When it comes to the basics of financing a purchase, you need to pay at least 10% upfront. Then, there’s the extremely favourable fiscal aspect, which many people overlook: as a property owner in Switzerland, the interest you pay on the mortgage debt is tax-deductible.
There are a variety of mortgage types available: fixed rate, variable rate, etc. Here again, we recommend contacting a specialist to help you choose. For buyers over 50, early withdrawals from this pillar must take place no later than three years before you become eligible for your pension. Your monthly housing costs must not exceed one third of your income in retirement.
On top of the current market being particularly favourable to buyers, not to mention the “dead money” spent on paying rent every month as a tenant, all these factors are a great incentive to own your home!
Home ownership, an investment with long-term benefits
In conclusion, becoming a homeowner is within your reach, especially if you do things in the right order with the help of a specialist. When you own your home, you’re paying off your own property, whereas when you rent, you’re giving all that money to a third party without building up any equity.
If you do choose to buy your home, your children are sure to thank you later on: bricks and mortar is a safe option from an inheritance point of view. In addition, when you own your home, you can re-mortgage it should you need to help a family member buy a home of their own one day. With so many benefits, it’s clear to see why buying a home in Switzerland is such an appealing proposition.
We have our own expert team who can provide any further information you need, so don’t hesitate to contact them !