Pledging your portfolio to buy your primary residence


#21

Hello,

if I’m not wrong, if you want to get detailed info, you have to pay 900 CHF for their service, but it’s relatively easy to lower it down - my colleague from Nestle got immediately offer to pay only 500 CHF due to his employer. So worth asking, even though it’s still a lot, so if there is someone that could confirm bigger discounts (0 CHF? :D), please share :).

Best


#22

It’s a shit deal because I would have to pay 600 CHF a year (200k at 0.3%) in custody fees? The custody fees just increase the interest rate of the mortgage. Assuming a 1.2% interest rate plus 0.3% for custody fee, it’s still only 1.5%. Borrowing at 1.5 to stay invested at 5+% seems like a pretty good deal to me. But I’m more than ready to be proven wrong…

I don’t have to do anything. Please note that I’m just exploring this on a theoretical level. I don’t want to buy real estate. But I’m also a pragmatic: if it makes sense financially, I’m willing to pursue an idea until it is disqualified. Isn’t this community here to explore new ideas in the field of personal finance and FIRE?


#23

They say that the first appointment is free. Then it’s rather expensive (275 CHF per hour). But imagine that they can save me 0.1% per year on the mortgage. Imagine that thanks to their montage, I don’t get margin called during a crash. Imagine that through a clever trick, I would save just 500 CHF in taxes per year. That would be money well-spent.

I don’t mind paying for good advice and experience for important and expensive issues. There is just so much that can be optimized and that I’m not aware off…


#24

Yeah, fully agree, but why don’t ask for the discount if it is possible ;).


#25

You’ll probably find a similar apartment to yours for 400’000 Franks, requiring around 40’000 of your own cash and 40’000 of low interest 2nd pillar money. You have 51k sitting at 0% interest, either invest that with viac or use it for an apartment.

So lets assume opportunity cost of 2% for your 2nd pillar and 7% for the rest.
0.02*40’000+0.07*40’000 and you are at 3’600 CHF per year in opportunity cost.
Add 3200 for the mortgage and 4000 for maintenance. Insurance and selfrentvalue will add another 1’500 to 2’000 per year.

In the end, you’ll still save around 300 CHF per month if you buy an apartment. More if you find one similar to yours for less than 400’000.


#26

this is a good calculation

I was shocked how low property values in AG are. The prices in canton Zug are literally 3 times that.

For me the calculation (similar apartment) is:

0.02 * 100000 + 0.07 * 100000 = 9000 (opportunity cost) + 8000 (mortgage) + 10000 (maintenance) + 1500 (insurance and rest, probably too low) = 28500

Rent is 30000 a year

If you calculate opportunity cost with the long term SPX average (11%) we would literally throw away money


#27

Well… AG is big. So if you drive far enough, you get cheap prices. ZG is small so anywhere in the canton you’re close to Zug right?

We are pretty set on not having a car and don’t want to spend a long time commuting, so living in a town on the Zürich-Basel line is a must. Prices are higher there. Plus (for the same reasons), we want to live at walking distance from the train station, Migros, restaurants, etc. So that’s an even smaller inventory and therefore even higher prices. We are lucky enough to live in such an apartment now and would only move to something that also fits these conditions…

We would have 0 interest in living in the places listed by @xorfish (no offense…) even if they were half the price.

Anyway, I would appreciate it if we could keep this thread dedicated to financing real estate by pledging a portfolio of stocks, the financial advantages and the risk. Not trying to be rude or anything :wink: