There couldn't be a better time for realizing your dream of owning your own home. Mortgage interest rates are still very low at present. But despite low interest rates, it is essential to have sufficient equity capital to fund the purchase.
To buy an owner-occupied apartment or your own house, you need to contribute at least 20 percent of the market value as equity capital. This can comprise savings and securities holdings, pension capital, life insurance, gifts, or inheritance advancements. The remainder of the required capital, no more than 80 percent, can be financed with a mortgage. In this case, it is possible to select from different products with different terms.
A long-term affordability calculation is essential
In addition to complying with the lending guidelines, you need to determine whether the financing is affordable. The affordability calculation is used to ensure that you can afford the financing of your own home in the long term. This also has to take into account that mortgage interest rates will not remain at the current low level for ever. When calculating affordability, the following rule of thumb applies: For long-term financing, mortgage costs (imputed mortgage interest, repayments, and maintenance and ancillary costs for the property) should not exceed one-third of your gross income. The table on the right gives a simple sample calculation for real estate financing.
Legal requirements for expats
Foreigners who wish to purchase real estate in Switzerland should be aware of the legal requirements. If you are a citizen of an EU or EFTA country or a third-country national and already rent a place to live in Switzerland, you generally need a "B EU/EFTA permit (for resident foreign nationals)" to purchase a plot of land or an existing property for your own use. If you hold a "C EU/ EFTA permit (for settled foreign nationals)" for Switzerland, you are allowed to buy more than one plot of land for residential use or real estate of any kind. For people who are not resident in Switzerland, a permit is required to purchase real estate.
When buying your dream home, good advice is essential for making the right decisions from the outset. Please contact the Financing Experts at Credit Suisse to arrange a non-binding personal consultation at 0844 100 114.