Hi everyone,
I (Swiss citizen) am about to return to Switzerland for early retirement and want to purchase a house. Does anybody have any experience on how banks consider affordability for mortgage with significant savings but only income is capital gains and dividends from stocks? I could buy the house cash and still have enough money to live but obviously don’t want too much tied up in illiquid assets so looking for somewhere between 50% and the mandatory 20% as down payment.
ZKB considers around 3% return of invested assets (at least one empirical data point, maybe worth to be confirmed my others here).
Which canton will you buy in?
Canton is ZH
It was once mentioned on the forum that Migros bank could do it and assumed 2% return on assets.
I am very interested if anyone has experience to share about Canton Geneva or Vaud.
It’s going to be Glarus or, less likely, St. Gallen.
Updating my own thread here about using an equivalent income from investments for the affordability calculation
-Postfinance can only do it once you reach regular retirement age.
-Swissquote won’t consider investment income
-Migrosbank first said they can and then said they won’t (I am actually a customer there)
-Raiffeisen were not interested
-MoneyPark were not interested either
-UBS can do it but they completely disappeared after a first in-person appointment at their main branch in Zurich
-ZKB can do it, I think they assume ~5% equivalent income
In the end, the only option was ZKB and they will provide a mortgage at 58% LTV, my requested mortgage value. They want the equivalent of 62% of the loan held as investment at their bank, the rest can stay invested where it is (IBKR UK and eTrade). And pillar 2/3a have to move there, which is not much in my case, not sure whether I can use their Frankly.
If I didn’t have to provide a “Zahlungsversprechen” for our new build, I would seriously have considered an IBKR margin loan instead. People who plan to FIRE are probably well advised to renew the mortgage beforehand. Although my situation was complicated by the fact that I only recently abandoned my US green card and some Swiss banks then tend to treat you like a leper.
As in renew with a contract ending after the default retirement age?
If you renew with the bank that you had your mortgage before, I would assume that they are a bit less strict on the affordability requirements. In my case, I never had a mortgage in Switzerland.
FIRE people are still considered an odd case (how dare you retire before the reference retirement age…) so the closer your are to reference retirement age, the less your are an odd ball to the banks. Meaning if you are 10 years away when you FIRE, I would definitely choose a 10-year fixed mortgage to avoid all the hassle. If you are further away, it becomes a trade-off between increased interest rate vs. risk of not being able to renew.