Current mortgage rates and conditions

Real Estate
22

Indeed it is not making sense to indirectly amortize on a regular 3a account: you loose the benefit of investing on a VIAC or Finpension 3a.
But if you amortize directly (usually quarterly) and your mortgage rate is low, you also loose investment opportunities on the market.
In our situation we have been amortizing on a regular 3a since many years, before we knew about VIAC etc. So I am now progressively DCA-ing from this pledged 3a to an investment fund from my bank, despite the very high fees compared to ETFs. Let’s see how it developps on the long term

From my experience the amount of amortization is between 2500-10000 CHF per year, depending on many factors

23

And would you recommend to go for their shitty 3a funds to get some interest out of that blocked money or rather the cash only 3a instead? I’m still doubting wether I should switch my regular 3a with the bank to a 100% or 80% stock fund 3a but I’m very clear that their TER will suck bad.

24

Totally. 3a cash accounts have what, 0.05-0.10% interest? Total waste of money to leave it there. Ideally they offer passive 3a funds, but if they don’t, it’s still much better than cash. I would chose the highest stock option, like Vitainvest 100 World at UBS. Might have a TER of 1.8%, but should still get you 3-4%/year longterm.

Consider this when you are chosing the bank for your mortgage. ZKB for example has Swisscanto 95 with 0.38% TER. 1.5% lower than UBS Vitainvest 100 World. Will make a difference of 20k in 15 years or 13k in 10 years with 8k/year 3a.

That’s 1.3k/year on a 720k mortgage. Or in other words: 0.82% 10 years fixed with UBS and 8k/year Vitainvest 100W will give you the same result as 1.00% 10 years fixed with ZKB and 8k/year Swisscanto 95.

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25

As others said, indirect amortization lets you borrow today relatively cheap money, that you can invest in more risky assets. Even with relatively high fees plus the interest payment, you might have a higher expected return in the long run.

I guess it´s not about the numbers but your personal risk profile. Some home owners are quite comfortable to pay down at least part of their debt, and are sceptical of ladding more leverage.
You can still add risky assets of your chosing in your own portfolio or 3a.

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26

www.key4.ch

Anyone checked it out?

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27

I thought that you can choose where to open the 3rd pillar, but it is important that it’s a policy and not and account. So you are oblige to contribute it.

I have the mortgage with ZKB and the 3rd pillar with another company and it was never a discussion point.

28

I’m pretty sure it’s somewhere in a clause of my mortgage contract that I have to do the amortization using their pillar 3a offering. But the fact that some 35k CHF are currently sitting around uninvested makes me sad.

29

Would it make sense to make a mortgage for an house/appartement already paid in full to invest the mortgage in the stock market ?

30

It’s a form of leverage in the end but certainly possible. I don’t however know anybody in Switzerland that would/has paid their house completely tho.

31

I’m kind of in this position / will be soon, but up till now I’ve decided against it out of diversity reasons.
In my mind, taking up a mortgage and investing the “proceeds” kind of reduces my exposure to RE asset class and increases the stocks asset class by that amount. I count that RE to “low-risk” and I’d actually like that certain share of my portfolio “low-risk”. As the house is not worth that much, it’s not exactly >50% of my postfolio. For such a high amounts as may be more common, I might consider a mortgage though.
I may consider a mortgage solution close to FIRE, as banks like their mortgage-takers having a regular paying job, so just before FIRE may be last opportunity to actually get a mortgage.
Interested to hear if my thinkings about this topic is wrong.

32

On this very same topic I was wondering how do you save your 20% capital equity which you need to provide upfront for a house mortgage?

I presume you do not save this money on a bank account until you reached the 20% because it could take a few years but instead simply invest it into your favore ETF like VT and when ready sell, am I correct here? or what would be the FIRE way of saving your money for the mortgage start capital?

I would not touch my pillar 2 or 3a here for the mortgage and rather save the required money.

33

That’s not really in line with “don’t invest in stocks the money you need in near future”.
I don’t have experience, but I guess I would search for a safer interim haven.

34

is it personal preference or financial prudence? Curious because interest on pillar 2 is rather low. Why not use that money?

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35

I’m also curious behind that rational? Since Switzerland allows to bring 50% of that 20% down payment from Pillar 2 and 3a, why not use it?

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36

Mainly two reasons, first my 2nd pillar is quite small as I started to pay it very late and second I would like to keep it a safety cushion in case the markets are in a bad state when I am over 60-65yo. Ah last point because I have been filling up my 2nd pillar by injecting some cash to fill my “2nd pillar hole” I am not allowed to use it for 3 years for any mortgage.

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37

Only the part you injected tho. So let’s say you accumulated 20k regularly, injected 10k each over the last 4 years. In this case you would have a withdrawable balance of 30k+ CHF today.

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38

But what do you think about not using it if you don’t have to? In case you have enough cash for 20% - what would you do? Use 2nd/3rd pillars anyway (assuming that your stocks allocations is already high and you don’t want to put there more ;))?

39

I asked the same question yesterday on the FR thread “immobilier: achat vs location”.
I am very curious about the thought process of people who used their pilar(s), partly or fully.
So far we always had enough for the downpayment and we anyway did not feel comfy to reduce our share on bonds.
Keen to hear other voices :blush:

40

I simply didn’t have enough cash for the downpayment so taking out Pillar 2 and 3a was a good option for me to get the money together. If I can trust all those housing estimates platforms my appartment appreciated 200-300k in the last 3 years so that’s certainly a better investment than leaving the money in Pillar 3a and 2 (3a wasn’t invested in the stock market at any point tho).

41

We chose not to use our pillars as we had enough cash.
For the next acquisition we might use a small part (ca. 10%) of it as our bond share is inline with the arbitrary rule of having age = share of bonds. So bonds représente 40% of our NW. The reason would be not to miss the leverage effect in case we would need it.