EvaHomes for financing 10% of deposit - thoughts?

Hi all, recently I found EvaHomes Evahomes - Becoming a homeowner has never been easier.
In short, and a general summary from my interpretation, if you have 10% deposit + fees (cash), they can source from private investors the remaining 10%. This additional 10% is at a higher rate, and they charge a fee as well. But it would enable more leverage if deposit is the difficult point.
It seems interesting, and the only option I have seen in Switzerland to purchase a property without the full 20%.
Does anyone have any experience / knowledge / thoughts on EvaHomes?
Or any other options if you don’t have the full 20% + fees?

I know you commented on other posts as well, which most of them I didn’t read.
If you don’t have the 20% to buy a house, I would ask myself “why is there an urge to buy?” That’s the question I would start with. Plus thinking about why I didn’t manage to save those 20% yet.

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In my opinion, if you can’t afford the 20% downpayment, you can’t afford to buy the house.

Also, if you fulfill the affordability criteria, but were not able to save the 20%,you’re most likely someone who’s not able to mange his money well.

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Hi - this one is easy to answer. We have already purchased / currently own 2 properties. As you would understand, purchasing properties requires a lot of deposit. So this used up a lot of our cash in terms of pure liquidity.
Actually, we can afford the 20% deposit no problem. However to do so, we would need to sell a good portion of our share portfolio. But if we already own 2 properties, and if we liquidate our shares, this does not seem like good diversification to me. We have 10% in cash no problem, and we would rather finance the other 10% than sell our shares which we saved hard to build.

Then why do you need a 3rd peoperty? Sounds like an investment for me, but than you should be convinced that it’s a better investment than stocks and sell part of your portfolio, otherwise, why would you want another property?

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To extend my other comment, this will be my 4th property purchase, and my 3rd current ownership. Real Estate is our interest / main investment. Hence, my interest in the topic. :smiley:. Although we do keep a sizeable share portfolio as a buffer. All EFTs, and they are ok, but real estate is such a great investment I feel, and I like to bounce ideas… lots of wisdom in this forum. The Swiss property market, I’m still working out if it is a good buy or not. All other properties we purchase are in different countries.

For visibility… the reason for my increased comments now is we are negotiating a property now (Swiss). To be honest, I am trying to determine the pros/cons.
With a normal 20% mortgage, we would need to sell 1/2 of our share portfolio for the deposit (unless we do something like EvaHomes or similar).
Huge decision and purchase, so actively reading this forum.

Do you own those properties also in Switzerland or somewhere abroad?

To be nitpicky: you can’t :slightly_smiling_face: You would have to sell some shares to be able to afford the remaining 10%. That’s a situation some of us in this forum have as well (myself included).

Ok, that just answered my question from above. Personally, I don’t think the Swiss real estate market is a good investment. The returns are pretty low, especially if you factor in all costs. If you look at it from an investor point of view, Swiss real estate doesn’t make sense (considering you can get more returns in other countries and might need less downpayment).

If I remember correctly, there were also some questions regarding B- and C-permits in your case. Banks might not finance you if you are not a citizen or C-permit holder (in case of buying real estate as an investment).

I looked into real estate five years ago and also went to some meetups. Most of those guys invested in Germany, because they could get 100% or 110% financing from banks. Also, the returns were better than in Switzerland. I looked at it myself, but for me it was already too risky back then. You were struggling to find any good real estate with 7% return (which you should have if you want to have a positive cash-flow). Those that you could find were not in very popular areas, and therefore risky from my point of view.

From my point of view, you are trying to buy at the peak of the bubble. Of course, prices can continue to go up, and I don’t have a crystal ball. Still, prices have only seen one way during the last 20 years in Switzerland: upwards. From a purely investment POV, I don’t think it makes sense to invest in Switzerland. Too much downpayment, returns are way too small, restrictions when it comes to “buy to let” as a non-Swiss person. The way I see it is that you are speculating on a further increase in prices, and you might be able to sell for more in 10+ years. But that’s speculation, not investment.

Edit:

Real estate is a great investment, until it’s not. The reason why it was a good investment in the last 10 years was a) quantitive easing and b) very low interest rates, which lead to huge increase in prices (at least in Switzerland and Germany - I don’t know other real estate markets). So yes, it was a good investment in the last 10 years. Could it continue? Yes. We don’t know. From my point of view, you are late in during the rally. But I’m just a random dude on the internet, so just take this as an interesting point of view :wink:

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Thanks FireStarter for your thoughts. They are appreciated. We were really at the closing points of discussion for a purchase, and you know at the last stage, you start getting nervous, and hence the forum posts.

By “last stage”, I mean aside from finding a potential house, bank pre-approval - done, pre-approval with the canton for acquisition - done, meeting with notary/lawyer to determine questions about ability to rent in the future and other details - done. Close to the point of no return.

But I truly feel not-great about selling so many shares (ETFs) for the deposit.

What I do agree with you is that this is at the top end of the market - everywhere I feel (all countries). I also agree that I don’t think there is much room for huge capital gains in Switzerland. However, this will actually be our principal residence for now (who knows for the long-term future, hence the rental option). Repayments will be about 2/3 what we pay in rent today. Add on other costs, and it is about equal… so we are buying something as opposed to rent for the same price. So from this perspective it makes sense (to me anyway), except the liquidating a huge amount of shares. This led to this post about EvaHomes, and other similar options which would enable to keep the shares and buy the house. ‘have cake and eat it too’. Anyway… decisions, decisions :slightly_smiling_face:

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I have the feeling you are already after the point of no return. At least from what I read and sense, you already made your decision (by 90%). Which is ok :slightly_smiling_face:

If you pay roughly the same amount you pay today for renting, I think it’s ok. You can do whatever you want with the house, because it’s yours. Keep in mind that the very low interest rates might rise again in the future.

I totally understand it. You think that your ETFs will have a higher return than the Swiss real estate going forward. That’s also what I think, but we might also have 10 years of markets going sideways. Again, not having a crystal ball here.

I don’t have any experience with EvaHomes, and I’m usually sceptical when it comes to involve 3rd parties as well. I would check the terms and conditions of EvaHomes very carefully. Think about it: the bank doesn’t lend you more than 80%, so why should a 3rd party lend you more for better conditions?
If the terms and conditions are ok, and you are ok with paying a little bit more interest to EvaHomes - I think you can go for it.

From a pure investment point of view, real estate in Switzerland doesn’t make sense. In your case, it will be your principal residence, so things are a little bit different.

Good luck with your decision making! Don’t only look at all the numbers, but also listen to your gut feeling :slight_smile:

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It’s be also possible to borrow against the shares instead of selling them (search for “margin loan” in this forum).

Many thanks. I called my bank (one of the large Swiss banks. Delay as my manager was away for Easter vacation)… unfortunately they said that they no longer offer this service. He said in 2019 it was possible, but not any more.

Interactive Brokers offer this

It is possible to have a full financing (I did it several times, but of course that‘s more for prime customers). A 90% financing is more common since you can give some securities as collateral (pleding 3a or 2nd pillar or shares of a buy and hold strategy, since it will be blocked.

The example you are naming: no one is giving cheap money, so you can expect a very hefty interest rate for this (mezzanine) financing.