Anyone who wants to buy a house or an apartment and take out a mortgage must meet strict affordability and equity rules.
Martin player
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When calculating portability will not With the currently historically low mortgage interest rates worked.
Illustration: Christina Baeriswyl
You always mention the banks’ tough sustainability calculations. We know these are justified and to protect property owners. This understanding miss I at Ihear remarks. Likewise I am missing a reference to the possibilityto use the low interest rates for over-amortization in order to create scope for later. Readers question from D.F.
Homeownership in Switzerland is expensive and many cannot afford it. For some, the dream of having their own house or apartment is more likely to come true thanks to external financing through a mortgage. D.amit mBut to get a mortgage from the bank, insurance company or pension fund, you have to bring in some equity yourself and be able to carry the external financing well.
This is where the affordability of the mortgage that you mentioned comes into play. Basically, the bottom line is that the expense consisting of interest, amortization and maintenance for the residential property should not be greater than a third of the gross income of the mortgagee.
As a rule, a maximum of 80 percent of the property’s value can be financed through a mortgage.
When calculating affordability, however, the banks and insurance companies do not assume the currently historically low mortgage interest rates, but rather significantly higher average values of around 5 percent. This is because the lenders want to prevent customers from being able to pay the mortgage in the event of a sharp rise in interest rates. Today, such an interest rate seems completely excessive – in earlier phases, however, the mortgage rates were already significant over 5 percent. In addition, the calculation usually turns out to be round 1 Percent used for maintenance.
At least as high a hurdle for many who dream of home ownership, however, are the banks’ capital requirements. The rule here is that you have at least a fifth of the propertysmust finance the value with equity. At least 10 percent must be equity that does not come from the occupational pension scheme. Savings, money from the pension fund and the 3rd pillar as well as any advance inheritance withdrawals or gifts are counted as equity.
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As a rule, only up to 80 percent of the property is allowedsfinanced through a mortgage. Up to 67 percent of the propertysValues can run over a 1st mortgage and a further 13 percent over a 2nd mortgage. The latter must be amortized within 15 years or by the time you reach retirement age.
If you want to be on the safe side, you should only lend a moderate amount of money to your home and partially amortize your mortgage from time to time.
With all these requirements, on the one hand, it is intended to prevent mortgage borrowers from overburdening themselves financially – which I find sensible, since a too high mortgage can become a nightmare in phases with sharply rising interest rates. On the other hand, it is also intended to protect the banks. Because in the 1990s Switzerland was still experiencing a profound real estate crisis, which resulted in billions in write-offs at the domestic banks. In order to prevent this crisis, the Swiss National Bank is currently issuing regular warnings of the local real estate market overheating – It should be noted that the National Bank, with its low interest rates, is helping to keep real estate prices rising.
All of the above rules and hurdles are just minimum requirements. In my opinion, if you want to be on the safe side, you should only lend a moderate amount of money to your home and partially amortize your mortgage from time to time. So you pay less interest and increase your security. Against this background, I share your view that the current low interest rate phase can be used for amortization can. However, you should make sure that in old age you always have enough reserves despite amortization and that not all money is blocked in the property. Because in old age you usually don’t get a new mortgage.
