Buying your own home A privilege to help clients on their journey

Comprehensive advice and personal assistance pay off. A UBS mortgage expert offers a practical insight.

by UBS Insights 09 Mar 2020

Image: UBS

What’s it like to advise someone buying a home?

Mario Stoppa: It’s certainly a very emotional moment. As a client advisor for the bank providing the financing, I consider it a privilege to accompany a client, for example a young family, on their journey. Naturally our first meeting with clients takes place very early on, perhaps even before they’ve identified a specific property. We then assist them through all of the following stages, from financing and notarizing the purchase agreement to the topping-out ceremony, the handing over of the keys, and beyond.

What are the most frequently asked questions?

About buying: What’s the most I can afford to pay for a property? How will buying affect my taxes? How high does my down payment need to be? Of course people also want to know how high the future costs of owning the property will be. Although low mortgage interest rates seem very attractive, people are often nervous about whether they could go up again in future.

When should you contact your client advisor?

I recommend you involve your client advisor as early as possible. Buyers are usually faced with very complex issues and it’s important that the right decisions are made from the start. For example, in practice it’s often difficult to determine the market value of a property. The client advisor can calculate this using the hedonic method: a computer-based tool that calculates the current market value based on the different attributes of the project and its location. For existing properties, questions often also arise about the need for renovation. A lot of people grossly underestimate the renovation costs for older buildings. Our in-house renovation tool provides some very reliable guide values. Then there are questions about financial security, pensions and your future retirement situation. If you choose to finance a home using your pension fund, you’ll need our advice first.

Apart from the financing, are there other areas for which getting advice makes sense?

Yes. For example, very few clients are familiar with the typical technical formulations and jargon contained in purchase, construction and general contractor agreements. In practice, potential buyers are often put under time pressure, but it’s not always clear whether there’s really that much interest in the specific property or whether the pressure is artificially created. Clients can gain time by getting their client advisor involved at an early stage and their mortgage application approved early on.

What conditions need to be met to obtain financing?

The basis is the “golden rule” which says that the client requires a down payment of 20 percent of the purchase price, with the remaining 80 percent being financed by a mortgage loan. In addition, annual property expenses, i.e., mortgage interest, repayments, upkeep and bills, should not exceed one third of annual income. Our price and mortgage calculator, which is also available online, lets you obtain an initial estimate quickly and easily.

What are the main issues related to mortgages?

They vary a lot depending on the client. That’s why a personal consultation to identify the best strategy is so important. We determine the right financing option by drawing up an individual mortgage profile. This takes into account a number of factors including financial flexibility and risk appetite, and is the basis for our financing proposal. The client then decides whether the proposed product mix and the terms are acceptable and suit their long-term plan. Other points may also arise that we can then discuss in detail.

How should clients prepare for a meeting with the bank?

If you’re dreaming of buying your own home and initially just want to explore your options, it makes sense to bring along proof of your assets and income. If you have a specific property in mind, you should also bring along the related documents. If you’re uncertain about anything, give the client advisor a call before the meeting.

Useful information to help you prepare