Becoming a homeowner is a sound financial investment as well as a particularly wise inheritance choice. Having a place to call your own, a real family home, is everyone’s dream. However, finding property tailored to your needs and financial situation can be quite a challenge. Your dream can definitely become reality but may need a little work. Finding an apartment, a house or identifying the right investment is unquestionably a matter for real estate experts. To ensure your property adventure gets off to a good start, here are some useful tips to help you !
A dream that will come true with help from an expert
Finding the perfect place to live, viewing only properties of interest, determining the right budget, negotiating with banks, assessing whether or not to defer property gain tax payment, bargaining/estimating a purchase price... expert advice can make all the difference when dealing with these aspects. Becoming a homeowner is a dream that is comes true progressively, that requires real understanding of the market and its changes.
At Cardis Sotheby’s International Realty, we go the extra mile to turn your property dreams into tangible realities. And to do this, our best advice is forever the same: come and meet us! But, before you do, to make sure you are well prepared for our meeting and to ensure everything takes place under the best possible conditions, we invite you to take note of the key points below...
Locate your property
The location of the property that you have set your eyes on will greatly affect its final cost and, more often than not, depending on the financial resources available, buyers’ wishes and expectations may need to be radically reviewed. Once you have made your choice, you will need to secure the funds required by implementing all useful tools.
Securing your own funds
Many would-be homeowners are, in principle, terrified by the idea of securing their own funds. Yet it is vital to ensure your financial capacity is on a par. A range of options are open to you to help you raise capital...
Pillar 2 is, of course, the basis for obtaining financing. However, at least 10% must be sourced in other funds. This can be taken from personal savings schemes, from Pillar 3 or from an inheritance. You can also choose to purchase a buy-to-rent property that will help cover monthly repayments. It is common practice to reach out to family, your employer and friends for help.
All sources of funding that have the potential to provide you with financial injection should be used to ensure your project is successful. 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.
Highly-supportive Swiss policy
In Switzerland, projects for purchasing property are backed by a highly-supportive tax policy which specifically allows you to deduct carried interest and depreciation from income. Swiss bank interest rates are among the lowest in Europe and are currently very attractive...
Below is an example of the calculations that banks apply when appraising your ability to finance your mortgage:
Theoretical carried interest: 5%
Annual depreciation: 1%
Maintenance costs: 1%
In theory, this total should not exceed 1/3 of the total gross income for you as a couple.
Basic financing rules, mortgage mix and tax matters
To put it simply, when it comes to bases for financing: you must be able to pay at least 10% in cash. Then, there is the extremely favourable tax aspect - which many people overlook: as a property owner, interest on debt is tax-deductible.
A mortgage mix is feasible: fixed rate, variable rate, etc. Once again, we recommend you get in touch with an expert to help you choose what is best. For property purchasers over the age of 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 once you have reached retirement age.
These different factors, coupled with the particularly favourable market today – and with the deadweight losses incurred through paying monthly rent as a tenant – urge us to encourage you to become a homeowner!
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 an expert. When you own your home you are paying off your own property, whereas when you rent, you are making a third party wealthier month after month. If you do choose to buy a home, your children will definitely be grateful because as well as offering you a reliable inheritance option, you can re-mortgage it if ever you need to help a family member become a homeowner in the future.