I pay 2000 + 300 Nebenkosten. The Nebenkosten do not include renovation or maintenance, so they have to be hidden in the Kaltmiete. Here a quote from Mieterverband:
Die Unterhalts- Reparatur- und Verwaltungskosten sind von den Nebenkos-ten zu unterscheiden. Unterhalts-, Reparatur- und Verwaltungskosten muss der Vermieter zwingend übernehmen als Gegenleistung zum Mietzins.
OK all clear. Well it seems simple to me. When you amortize that additional 15%, you will increase your collateral from 121’000 to 200’000. Then you will need to compare your annual savings to this number. And just by rough calculation, it should drop to 4%. Currently you achieve a higher percentage, because of higher leverage (4:1, and in the future it will drop to only 2:1 loan/collateral).
Guys, don’t forget one-off costs which goes to a substantial amount in the first years (transaction closing fees and so on).
I know they had done a case study for canadian market here (which is obviously different from the Swiss market, but the article is worth reading anyway).
My point is Real estate is notorious for two things :
that is one of the few markets where participants happily go leveraged with the bank’s benediction
there are a lot of hidden fees which add up quickly, contrary to indexing.
I think this all depends what you buy and where you buy. Whether it’s a house or an apartment, new build or second hand, modern or in need of renovation, off-plan or individually designed, etc.
In my case (off-plan new apartment) the only extra costs I can think of were the notary fees (Notar, Grundbuchamt, Schuldbrief), total 5740 CHF.
This was the case when I was shopping for mortgage in 2015. Online providers would only finance up to 65%. Perhaps this has changed now? MoneyPark is an intermediary. They write: “The displayed interest rates are the best rates currently available and professionally renegotiated by MoneyPark. Your personal interest rates may vary depending on LTV, affordability, mortgage amount and the location of the property.”.
They still have this on their website. Perhaps no longer valid?
“Belehnung: Maximal 65% des Immo-Werts sind möglich (1. Hypothek).”
That’s a good point with all the extra charges, but even if we ignore them, by an extremely low interest rate of 0.6%, and and LTV of 65%, the return is only 4%. I guess I’m good with renting.
What if you also get a return on your capital with the property increasing in value? I know this may not be so obvious in current environment, but the property market crash did not materialize despite prices on an almost constant rise since 1999.
Even if by coincidence, I might have lucked out.
My 2015 built apartment was effectively 4550 CHF/m^2. I’m now seeing similar new builds in the area sold for 15-20% more.
Personally I prefer LIBOR, at least if it means that you are not tied in with the bank for a fixed period on that deal (my bank had a tie in period for 3 years - which was very bizarre to me, so I went for a 1 year fixed instead). In my opinion it is best to not fix your mortgage for the following reasons:
fixed rates are based on projections by the bank’s credit department. The fixed rate proposed by the bank is likely to be higher than the increased LIBOR the bank is expecting for that (1 year, 5 year, etc. ) period in the future.
central bank are better at managing rates that they used to be and therefore I believe (but I may be wrong) that rates may rise but it will not be sudden so you could then take a fixed rate
life stays unpredictable and some industries restructure their business and people have to move to other part of town, cities or countries, selling your home without mortgage penalties would be a plus
Most LIBOR contracts have a multi-year minimum contract term so it’s just like fix but with more steps & risk
No no no, they don’t take on such massive risks if these projections turn out to be wrong. They’ll secure your rate with swaps when you sign or straight up sell off your mortgage via Pfandbriefbank or something and just pocket some safe 1-2% difference.
Every interest rate “projection” I’ve seen published by a bank anyway has always screamed RATES ABOUT TO GO UP BUY INSURANCE NOW
I now know I should have taken LIBOR, but as a sole earner it felt reasonable to buy some relative safety. I took 1/3 LIBOR and 2/3 fixed 9y.
Still, the numbers are easy to calculate. In my case the total premium over 9y duration comes out at around 2600 CHF before tax and under 2000 CHF after tax as compared to going LIBOR only. Hardly a catastrophe. I’m burning at least that much in all other insurances in a single year.
I’m right now in negotiations with 3 different banks for a mortgage extension next year. And the best offers I got so far were:
5 year fixed for 0.67%
10 year fixed for 0.88%
SARON (formerly known as LIBOR) at 0.55%
Technically it seems to be a no brainer to go for the SARON for the next 3 years but are there any hidden fees or risks besides the potential raise of the rates to consider?
If the bank asks you to commit to 3y intervals for SARON, also ask for 3y intervals for fixed (6 or 9y). Do whatever fits your risk tolerance best. Difference is miniscule in financial terms.
How did you decide which banks to ask? If we manage to close the deal, I would have to do the same soon…
I was also thinking to ask 3 different banks, 1 cantonal where I already have an account, UBS (as I have already been in contact with them for other project) and some third one, not decided yet which one. I was also thinking to add MoneyPark to the equation, to get more complete picture.
What do you think about this approach? Can you recommend any banks I should ask, knowing that they are currently (or recently) open to be competitive in this area?
Check out BKB / BLKB, especially BKB is very motivated right now to get business.
Migros Bank is always the best bet to get rock bottom rates and then use them to negotiate with other banks.
I would recommend Hypoplus (mortgage arm of Comparis) instead of Moneypark. They were quite helpful during our mortgage process and even got an offer from a Kantonal Bank for 0.55% for 5 years (we would have had to bring 21% cash to the table)
If you need a specific contact at Hypoplus, I am happy to recommend. PM me for more details.
BCGE because we have special conditions from my employer with them
LUKB because a friend works there who also managed to push interest rates down when I originally got the mortgage
From what I can tell LUKB seems to be most attractive for now, obviously I don’t know if they would give the same condition to other clients but stuff like not mandating the salary account to be with them and no cost for creation/extension of the mortgage sound very convincing.
I used Hypoplus when I bought the apartment initially but they claimed that all 35 banks/institutes they reached out to were not interested because I had some smaller private debt in my 2015 tax report. Only Raiffeisen and ZugerKB were willing to make an actual offer back then.
SARON is typically calculated in arrears vs LIBOR that was fixed at the beginning of the period. This means that you will not really know your interest payment until the time payment is due. In any case I guess not a big thing due to the relatively low volatility of rates but if important to someone apparently some banks are willing to commit in advance for a slightly higher rate.
On another note is anybody aware of the offer from GLKB? If i understand correctly it seems that you can avoid breakage costs in case you sell the house (!). Published rates appear to be higher from the ones discussed here (dont know if these are negotiable) however one may want to consider to get this flexibility which could potentially save you huge amounts if you lock for 10 years and then decide to sell the house (I think most banks will ask you to pay your rate minus the reference rate which since it is negative will actually be added to the total!)…
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