You dream of buying a house for the family, or plan to buy an apartment as part of your retirement planning. Perhaps you would simply like to invest your money in a property rather than carrying on renting.
Why buy a property – and why not?
There’s no neighbours there, tramping around above your head. And you have the whole laundry just for you. In your own house you get to decide not only the colour of the walls, but the type of flooring or layout of the rooms as well.
A home of one’s own can moreover be a good investment. Depending on the actual conditions within the property market, living in your own home can be cheaper than renting a flat.
But having a home of your own brings commitments. If you want to change where you live at some point, then with a house and mortgage it’s by no means so easy. Either you must end the mortgage term prematurely, which often carries a penalty. Or you must try to convince the buyer and the bank to take on the financing.
Should it be a house or an apartment?
A house brings many responsibilities and generally a substantial financial burden. As a rule, things are somewhat simpler with an apartment. Usually an organisation takes on the maintenance of the property. Commonly with an apartment you also don’t have to concern yourself with repairs, such as that broken garage door or crumbling facade.
In addition, you often save money. The costs of the plot of land is divided between the apartment owners. The same applies to the operating and maintenance costs. Admittedly there is a corresponding management fee but still overall an apartment is normally more affordable than a house.
In exchange you can also freely decide on things within your home, such as how the bathroom is designed or if you’d like to put in a kitchen island. Decisions which concern all owners within the property are dealt with at the annual property owners meeting. Even if you draw the short straw as a result of the vote, you must still accept the decision.
If the majority of the owners vote to paint the building pink you can do nothing about it – even if you think it is completely unsuitable. You’ll pay your share of the painting and look at the pink house every day.
How much can you afford for your home?
Before you begin the search for a suitable property, you should have a clear set of financial parameters laid out. Then you won’t be disappointed that your chosen house or apartment is too expensive after all.
How much your own four walls may cost depends upon how much equity you have available and how high your gross income is:
At least 20% of the purchase price must be paid from your own funds. Up to half of that can come from your company pension fund. If for example you have 80,000 francs equity in total, you can afford property of up to 400,000 francs.
On top of this you need to determine how much you can afford to pay each month for mortgage interest and amortisation as well as maintenance and ancillary costs. As a general rule these ongoing costs of home ownership should not amount to more than a third of your gross monthly income not amount to more than a third of your gross monthly income. The best way to estimate these costs for your home is by using the mortgage calculator.
Rent or buy? Here’s how to make the correct decision:
Buying a house or apartment is ideal if:
- You would like to spend the next 10 to 20 years in the same place.
- You have enough equity for your desired property.
- You wish to save for your retirement through property.
- You can well afford the monthly mortgage payments.
Renting may suit your circumstances better if:
- You wish to remain flexible where location is concerned.
- You don’t want to be tied to a mortgage.
- You only have a little equity available.
- You can barely afford the monthly mortgage payments, if at all.
- Perhaps later you could take on your parents’ house.