1. Why even bother becoming a homeowner?
The owner calls the shots: whether colorful walls, a bed of flowers in the garden or a new kitchen – someone who owns a house or an apartment can design their home as they please. What’s more, there’s no risk of being evicted. Because your landlord claims their property for their own use, for example. It’s great for all those who make long-term plans. And besides: because of current low interest rates, owning is often cheaper than renting. Property can also be quite an attractive investment.
2. What’s more affordable: buying or renting?
Most often, living in a house of your own is still more affordable. Homeowners gain more from current low interest rates than renters: on average, their utilization costs are slightly lower than the rental costs of comparable properties. But because renting is becoming more affordable and the prices of properties continue to go up, in a full cost accounting, the ratio is shifting to the benefit of tenants. This has already happened in exclusive and expensive locations: renting there is more attractive than buying.
3. What can I afford?
In most cases, buying a home starts with a specific property and the question: can I afford it? If you approach buying a house from this angle you run the risk of coming to grief. Even if both the mortgage interest and running costs totaled up are lower than your current rent, lenders may often still say no. The most common reasons for a rejection are because your yearly income is too low or because you don’t have enough equity capital. So, it makes more sense to ask: what can I afford? UBS’s mortgage calculator can give you an indication. By way of shorthand: you should be able to purchase the property you want if it costs no more than five times your gross yearly income and you can round up 20% of the property value as free equity.
4. Buy or build?
The choice between buying or building is available only to a few: building land in central locations is scarce and costly. If you own some land to build on, you can make your own dreams come true. But someone who buys can also influence the design: an “off-plan” purchase or conversion lets you design your house or apartment to suit your own needs.
5. Condominium or house?
Condo prices have risen sharply in recent years, so this is only partially a question of your budget. On average, the cost per square meter for a single-family house is lower than for condos, so – when all is said and done – the latter are only more affordable if the living area is smaller. Choosing between a house and a condominium is often a matter of personal preference. House owners have the most freedom to make changes to their home.
6. How easy is reselling?
Selling residential property is generally easy in Switzerland because the local real estate market is working properly. The rising prices in recent years pay off for sellers. As long as the interest rates remain low, the danger of a sudden fall in prices is small. But if you must sell a house quickly, you may need to make concessions on price. This risk applies in particular to housing property in peripheral locations and very expensive or unique properties.
7. Where can I get the loan?
When it comes to financing a property, buyers have to make a choice. Apart from banks, insurance companies and pension funds are also in the mortgage business. Many also offer their mortgages online. The ever-increasing supply translates into increased competitiveness and lower interest rates, but also more work for the borrower. It’s worth reviewing the offers closely and obtaining expert advice. Not only the interest amount, but also the contractual terms are crucial, e.g. contract termination.
8. Does it make sense to split up the mortgage?
Splitting up the mortgage in several tranches reduces the interest rate risk. When the mortgage term ends, the general level of interest rates can be higher than the interest rate you’ve paid so far. Splitting up the mortgage in several parts with different terms each is a way to avoid the entire mortgage being renewed in one fell swoop at a higher rate.