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
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?
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…
Yeah, fully agree, but why don’t ask for the discount if it is possible ;).
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.
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
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 
So… I finally took the time to go to an appointment with a Money Park mortgage adviser.
Here is what I’ve learned:
It is indeed possible to take a mortgage covering 100% of the value of the property and to not amortize it if (and it’s a big if) the value of your collateral (taking into account the discount factor) accounts for 35% of the value of the property. So if the house cost 1 million. You may borrow 1 million and only pay the interest, provided that you have either 437k in a second pillar (350k/0.8 ; 0.8 being the usual discount factor for a 2nd pillar) or 700k in stocks (350k/0.5 ; 0.5: discount factor for stocks) or a combination of the two.
The value of the collateral (e.g. your stock portfolio), discounted by the corresponding factor must at all time remain above the 35% mark or the 20% mark respectively. So, assuming that you pledge your 700k stock portfolio to get a 1m mortgage without amortization ; if the value of your portfolio drops by 20% to 560k, the bank will give you a call requesting that you amortize the 350k-560k/2 = 70k “missing”. In that case they wouldn’t sell your securities but would require that you amortize the missing value. If you went for 20% with amortization (i.e. a 400k pledged portfolio), and the market drops 20%, then the bank will require you to wire an additional 40k to your account more or less immediately. If you’re unable to post additional collateral, then they will sell part of your portfolio.
The above paragraph is also valid if the real estate market drops. But that is always the case (i.e. even if you use a traditional financing strategy).
When you pledge your 2nd pillar, apparently the whole account (including the future contributions) is pledged. That means that if something goes wrong 20 years from now, in theory, the bank can seize the whole 2nd pillar account, not just the amount that you had on the 2nd pillar when you pledged it. But some negociations are possible to limit the amount that they can seize (the adviser wasn’t very clear on that…)
The notary fees in Aargau are ridiculously low (around 1% split equally between buyer and seller).
Just noticed this sentence in the first post:
“What this offers is the possibility to live in your own home without having to pay a penny of principal. Just pay the interests.”
You don’t own the home. The bank owns the home. 
Hey @Grog ! Thanks for resuscitating this thread!
I think that what you wrote is, and I’m saying that as gently as I possibly can, very wrong. Unless you’re joking, and in that case you may post my answer on r/whoosh, I won’t even get mad 
If you meant this seriously, then you are confusing bondholders and stockholders.
The difference between a bondholder and a stockholder is the order of payment. The bond holder is first in line while the stock holder is last.
Example to illustrate the difference taken from the excellent “how the stock market works” course by Prof. DeGennaro :
Suppose you invest $10,000 of your own money to start a lawn care business, and you borrow $10,000 from your friend Lisa at 5% interest. You use this $20,000 to buy a lawn mower and a used truck—your goody bag.
After a year of hard work, you take in $150,000, but that’s not all profit. From that total, you must subtract your expenses: say, $100,000. You’re left with $50,000, and you still have the now-used mower and truck; that’s your collection of goodies. Some people might think that you and Lisa should each get half of the goodies because you each contributed the same amount.
But Lisa loaned you money, which you then invested in the business. You owe Lisa $10,000 plus 5% interest, or $10,500. After you repay Lisa, you have $39,500 and your used mower and truck.
and truck.
The sharing rule that you and Lisa agreed to use in advance is that Lisa would get the first $10,500 and nothing more. You get nothing until Lisa is paid in full, and then you get everything that’s left over. You are the residual claimholder.
Economists would say that Lisa is a lender while you are an owner. Another way to say it is that Lisa is a bondholder while you are a stockholder.
The bank is a bondholder of the house and I am a stockholder. I own 100% of the house, and the bank owns a mortgage corresponding to 80% of the value of the house today. Less risk for them but less potential gains…
By the way, I am actually meeting MoneyPark again today: we have found a beautiful apartment that we would consider owning. Instead of pledging our portfolio, we will probably borrow against equities from Interactive Brokers at 1.5%. We will still pledge our 2nd pillar and use our 3rd pillar. There is some risk involved but the possibility to lock in a rate under 1% for 10+ years makes the reward attractive.
That’s the theory. Yes in theory the bank only owns the bond, and you own the house. But let me do this question: does it still counts as ownership if you need to go through the bank for every renovation/sanierungs work? The important ones? You may think you can do everything by paying cash upfront and not having the bank find out? The monitor these things and they will reevaluate your property value or even denying you additional loans for renovations at your home. Is not uncommon. And so in the end they have a lot to say on what you can do with your house regarding important works. So if somebody else can decide for you - do you truly own the house ?
Haha, that’s a philosophical question close to: is being free having no constraints? You could say yes, you could say no… There are no definitive answers, only opinions 
What does that mean exactly? If I want to renovate the house, it increases its value right? That increases the value of the collateral for the bank, so why would they say no? I’m not being rhetorical here, I would love to hear some examples.
Renovate does not increase the value of the house (for instance a new kitchen). They are “value keeping measures” aka werterhaltendmassnahmen. Building a wintergarden or a pool may count as value increasing works. They are strictly speaking not renovation, but new things.
Banks often do not increase or give out loans for werterhaltendmassnahmen, it’s a case by case situation, so you may be forced to pay everything on your own.
If you get a loan, banks will reassess the value of your house (which could impact taxation) and your income (which may be a problem in fire). Depending on how much is your income, they may ask you to cover some of the loan because of the reduced FIRE income.
This seems quite obvious to me… Why would you expect a bank to give you a loan for some fancy addition in the first place? It seems to clear to me that if I want nice things, I have to pay for them.
If they do give me a loan, it’s normal that they assess if the loan can be paid back, i.e. new Tragbarkeit calculation.
I still don’t understand how that makes you less of an owner. If you have the cash, you do what you want (more or less). If you don’t, it’s obvious that the bank has to agree, since you are using their money…
you said this, and I said that no, renovating doesn’t increase the value of the house, unless you add new things or new technologies that lower operating costs.
renovation is not addition. Actually banks are very eager to give you money for fancy additions because this increase value of the home (like a fancy winter garden)
The only point I’m trying to make is that while you are the owner, in some cases banks may request and put down some economical preconditions that may block the owner to do what he wants.
An example could be somebody that wants to resize his home, destroy it and build a tiny home for a minimalist lifestyle on the terrain. Banks may ask to immediate cover almost all existing mortgage because you are lowering the value of the estate. And you may renounce to your tiny home dreams cause you cannot cover the mortgage hole.
So you may be the owner, but you are not always in the dominant position to do whatever you want because you purchased the home with money which was not yours. That was the essence of the “joke”. It was still intended as a joke.
Hi @triviamaster,
Sorry for the small ex-topic.
how is you experience with Moneypark? We had vary poor experience and we felt we were led into a scam. They led us to a contract with Credit Suisse (which honestly we were able to get out of), so no damages done. But:
Swiss Life was for us a nightmare (with the adviser trying to push us to buy into some life insurance scam)… and also hiding important contractual feature (like increase of interest rates by 0.5% per month if the completion date is delayed)… Only lawyers helped us get out of it.
Hi !
Thanks for your feedback! I had a very pleasant contact with the MoneyPark adviser, for now… I don’t know how it will turn out in the future as they get offers for us. I’ll do my best to remain vigilant. I noticed that they try to increase the amount of the mortgage, because that’s how they get their commission (mortgage “volume”) but nothing too pushy…
I’ll make sure to inform the forum about my experience with them once the process is complete
Are you borrowing from IB and transferring it to CH or is your financing institute in CH lending you against your portfolio in the UK?
We plan on borrowing from IB. I don’t like having all my eggs in the same basket…
Well, economic cycle is pretty random. Australia hasn’t had a recession for almost 30 years. It’s an exception that it had so favourable economic circumstances (and pretty reasonable economic policies), but we don’t and can’t know how long it will take to hit another crash.