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“Home, Sweet Home”

Renting versus Buying Homes in Switzerland

In some countries there is nothing more normal than buying a house, doing it up and selling it for a profit a couple of years down the road, this way of thinking is completely foreign to Swiss cultures where more than 60 % of the population rent their home.

If you are a EU/UEFTA national or holder of a C Permit then buying any property is no problem, if you have a B Permit you can own property but only if you live in it yourself. i.e. no holiday homes, or properties for rental.

Whilst you own your property you will still be expected to pay a rental value tax, property tax and a wealth tax.

If you plan to sell your house, be aware that you will be paying a capital gain tax and a surcharge depending on how long you have owned the property. The shorter the period the more you will have to pay.

So be sure to think carefully before you decide whether to buy or not, sometime however annoying renting is the more sensible solution.

 

Buying Property in Switzerland

However should you decide to go down the buying road, here is some valuable advice from our partner UBS

Mortgage application process 

Once you have found the property you are looking for, we help you in making sure that you take care of all of the important tasks, including determining how much equity you need, calculating how much you can afford, creating a mortgage profile, drawing up a financing proposal, gathering market information on the municipality and estimating the value of the real estate.

 

The Swiss financing rules

The financing for your dream home generally consists of a combination of equity and borrowed capital.

 

Equity

Typically, the equity you put down must cover at least 20% of the property’s value and will consist of money from your savings and pension assets (pillars 2 and 3), inheritance advances or money given to you as a gift. At least 10% of the property’s value must be financed using equity which does not include funds from your company pension scheme (pillar 2).

 

Borrowed capital

It is possible to finance up to 80% of the property’s value by taking out mortgages.

  • You can finance up to 67% of the property’s value with a first mortgage. You are not required to amortise.
  • You can finance the remaining 13% of the property’s value by taking out a second mortgage. You will pay back this second mortgage within a period of 15 years or by the time you retire.

 

Ensure serviceability

The costs which go towards your own home should account for no more than 33% of your gross income.

  • Assumed mortgage interest rate:

In order to ensure that you can keep up the payments to finance your own home when interest rates are high, the calculations used to establish the serviceability of your mortgage are based on an average long-term mortgage interest rate of 5% per annum.

  • Amortisation:

For financing of more than two-thirds of the real estate value, the debt on two-thirds of the real estate value must be amortised in equal tranches (i.e. linearly) within a period of 15 years or by the time you retire.

  • Maintenance and ancillary costs: 1% of the property’s value

Would you like to find out whether you are currently able to afford your dream home?

Then please try out the UBS mortgage calculator on www.ubs.com/hypotheken or download free the UBS mortgage app straight to your smartphone.

 

We will assist you in realising your dream, from beginning to end. Please feel free to contact us. We speak your language – UBS Lucerne Markus Moll (Tel. 041 208 22 17 or markus.moll@ubs.com)

 

charlie.hartmann@livinginluzern.swiss

Charlie Hartmann is the managing director of the Livingin organisation which focuses on helping international residents connect, grow and thrive in Switzerland.

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