We are currently in the market of buying an apartment and I would like to get your feedback. I did go through the old threads, but still, it’s a big decision and I am a bit worried to have missed something (I am fine with compromises and drawbacks, but I’d like to be aware of them).
Here is our situation:
We (my wife – still in parental leave, our little one and myself) are in our mid-thirties and came to VS end of last year. We found a nice apartment that is currently being build and the basic idea is to diversify (we have an index fund portfolio and some cash positions currently). The property is slightly below 800k CHF and we want to go with minimum down payment. I went to a financial adviser to get some offers – the best: 10 y mortgage for 1 % fixed (I think that’s fine).
Unsurprisingly they advise to go with indirect amortization via 3a: life insurance with a fund portfolio (Pax fonds portfolio 100; management fee 1,4 % plus issue surcharge 1 %). According to the fact sheet the fund was established in 2002 (average performance of about 4,2 % p.a. after fee deduction). Obviously, I would rather go with VIAC or something similar, but I guess that is not going to happen. Still, I would assume (or must) an outperformance (fund performance after costs vs. interest rate of the mortgage #2) in the long run.
I like the idea of doing indirect amortization and the tax benefits that come along. On the other hand, if we need/want to leave Switzerland, we have to shift everything from 3a to 3b and the tax benefit is gone. However, paying back mortgage #2 at 1 % feels simply not right.
Have a nice evening