We have finally signed the mortgage papers and also the house!
Mustachian post helped me a lot on the mortgage, hence I am sharing here the term we got - I am honestly quite surprised on the flexibility that the banks have.
Mortgage Bank: UBS
Property value: CHF 1,240,000 and no renovations
Downpayment: CHF 5000 cash + CHF 62,000 2nd Pillar (5.4%)
Pledge (Pillar 3a): CHF 116,500 (9.3%) - Moved from VIAC to UBS 4key (a cheaper version of UBS 3a still expensive than VIAC)
Total mortgage: CHF 1,173,000 (Loan-to-Value ratio = 94.5%) with indirect amortization - so my LTV will remain at 94.5% forever until I decide to pay it back.
Affordability: 44% (Never thought this was even possible)
I could also negotiate the interest rates
SARON margin - 0.7% for an unlimited term (For now, we will be having all our mortgages in SARON)
Fixed 5 years - 0.95%
Fixed 10 years - 1.33%
SARON Terms
- SARON margin would be 0.7% for an unlimited term.
- No penalty for moving to fixed mortgage
- No penalty for the closure if the notice period of 13 months is given.
NOTE 1: I could get such terms after about 5-6 rounds of negotiations, and I had to show them that we have bankable assets more than CHF 300,000 (without including pillar 2a and pillar 3a). These assets are neither pledged nor transferred to UBS.
NOTE 2: I was pushing for low downpayment not because I am not capable, but to have highest ROI on the investment. In another view, I want lowest downpayment as I can treat the remaining as a personal loan to start my business (if I ever start).
NOTE 3: I negotiated the terms directly with the Banks (without having any intermediate brokers)