Buying a property - Some questions

Real Estate
124

I’m not sure, I’m years away from that. But interesting question whether the bank will actually ask you to amortize the 3a amount directly, or let it run indefinitely. Maybe some longer-time owner can chip in?
Good chance they’ll re-value the property and you already reach that level without amortizing.

My assumption is you’d have to amortize these 10% over the years, not lump-sum in the future.

Of course. Whether it makes sense depends on the situation. The typical use case would be either you want max mortgage, and /or you have high income but low equity (i.e. you don’t have 20% in cash).

125

Pledging is a transaction which hasn’t anything to do with the location of the assets (neither on Pension fund nor on 3rd pillar side)

You just have to enter the pledge with both institutions.

If your pillars are “overflowing” and the mortgage provider plays along you might be able to get a property without any cash down.

Source: own experience

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126

Correct. You amortise as you wish and usually on a monthly basis from the first month so that in 15y you have reached the 35% value.

So first 15y you pay interest and amortisation. From 15y forwards you can choose to pay only interest and stop amortisation. This is when it gets interesting. Because rent prices in 15y from now are going to be nothing close to the interest amount (in my case if I pull the trigger now it’s going to be 1000 per month)

127

You may achieve it by amortizing 0 if your real estate gains value.
Your debt must not represent more than 65% of the asset value, imagine you have 100% mortgage on a 650K object. If in 15 years your apartment is valued at 1M, even if you had not amortized and you still have 650K debt, you’re within the limits.

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128

For what it’s worth. This is equivalent to 2.91% price growth per year - which is below historical growth rates for ~3.3-3.6% p.a.

Perfectly doable

Edit: Come to think of this. Asset price growth in line with historic dimensions combined with banking industry regulations lead to your LTV being down to less than half after 15 years.

129

Interesting detail that I did not know.

So assuming an asset value increase per year, amortisation “pressure” reduces

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130

This is encouraging thanks

131

Revisiting this

I read that “in Switzerland, the amortization rule is fixed on the loan amount, not on dynamic LTV — you still must contractually bring your mortgage from 75% → 65% of purchase price within 15 years, regardless of appreciation.”

So this does not apply then? Gemini suggests that’s wrong and dynamic LTV can reduce amortisation obligation.

Does anyone know for sure if banks reassess periodically the property value as value can appreciate?

132

It probably means that once the mortgage contact is signed and the amortization terms are fixed in it, you can’t change them, which is correct.

You mortgage contract will run out at some point, and then it will be the time to reevaluate the value of the property and get a new contract. The amortization conditions will be based on the new situation, and often you will be already above the threshold required.

133

What is a usual duration of these contracts?

134

It depends. For a fixed mortgage, it’d be the term. You’d probably find some statistics online, I bet 10 years is the most common, followed by SARON.

For SARON, my contract is indefinitely, yet with a few month notice period. The contract includes what I amortize (partly indirectly with 3a, partly directly), just as PI wrote. Most likely, this could be adapted, but I don’t care.

The bank did mention they could eventually re-evaluate, I think there’s some regulatory period for that. It sounded a bit like an invitation to eventually borrow more.

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