After much deliberation, my wife and I have finally made the reservation for a new construction property!
Now the notary will happen in May and the property handover is planned for around Feb 2026. I understand that the irrevocable payment promise (unwiderrufliches Zahlungsversprechen) from the bank will need to be issued during the notary.
All the banks that I have spoken are ok to wait and fix the interest rate at a later point (anytime between the notary upto the final mortgage disbursement).
So, I would ideally like to wait with the following considerations -
For fixing the rate in advance, there would typically be a forward premium on the interest rate thereby increasing the overall rate.
The interest rates are most likely to go down further in the next 2-3 quarters.
The question I have is - am I locked in with the bank that has provided the irrevocable payment promise (unwiderrufliches Zahlungsversprechen) during the notary? Or can I still shop around for the best mortgage till the actual mortgage disbursement?
Not sure whether has any impact, worth mentioning though - we are doing a 90% mortgage by pledging Pillar 2.
I have a feeling you’re misunderstanding something about the process. (But I guess it could be a regional difference; it’d probably be good to specify which Canton the property will be in).
My Zurich-based expectation is that it won’t be a single notary appointment. Instead you’ll go to the notary once this May to sign the purchase agreement and once next February to transfer the deed.
For the appointment in May, you’ll be paying the seller 10% of the purchase price while getting basically nothing concrete in exchange. You should not need a unwiderrufliches Zahlungsversprechen for the entire amount. You might not use one at all, but if use use one, it’s only for the 10% and conditional on the signing of the purchase agreement. It’s also going to be coming from your own funds, not from the mortgage.
You might not use a Zahlungsversprechen at all since it doesn’t really serve any purpose here. You could just make a bank transfer a couple of days before the signing and have almost the same protections. But if it gives you piece of mind, your bank will be happy to create a Zahlungsversprechen backed by your own funds. It should cost a few hundred CHF. That bank doesn’t need to be the one that ultimately issues the mortgage.
Then on the second appointment you’re going to transfer the seller the remaining 90% and they’ll transfer the deed to you. Here a Zahlungsversprechen is critical for doing the operation safely. You’ll probably need to have it issued a couple of weeks before the deed transfer since the seller will want some time to verify it.
I doubt any bank would provide you a Zahlungsversprechen for the mortgage without you having signed the mortgage agreement and fixed the interest rate. At most they’ll give a non-binding letter saying that you meet their mortgage criteria. A situation where you’ve got two separate promises to pay for the full amount actually seems quite dangerous, though I’d hope there
The final choice of a financing partner including contracts will usually be made after the reservation but before the notarization. Because you’ll need the irrevocable payment promise (unwiderrufliches Zahlungsversprechen) at that time.
This above is mentioned by the seller in an e-mail.
Die Käuferschaft legt anlässlich der öffentlichen Beurkundung des Kaufvertrages ein unwi-derrufliches Zahlungsversprechen einer schweizerischen Bank für die restlichen Zahlungen vor. Der öffentlich beurkundete Kaufvertrag wird voraussichtlich im Mai 2025 abgeschlossen.
English - At the notarization of the purchase agreement, the buyer will submit an irrevocable promise of payment from a Swiss bank for the remaining payments. The notarized purchase agreement is expected to be concluded in May 2025.
The above is mentioned in the reservation agreement.
This is in Basel-Land. In my discussions with the banks, I have not asked specifically when the Zahlungsversprechen would be provided. Based on what you have mentioned in your post, I need to clarify the process with the banks.
When I have asked them about fixing the interest rate, all of them have said it can wait until the mortgage disbursement.
I obviously do not want to do that and hence my original question.
In many cantons, an irrevocable promise to pay from the lender is required instead of a financing confirmation for the final notarization of the purchase contract. An irrevocable promise of payment is the lender’s commitment to transfer the purchase price amount. The lender makes an irrevocable promise to pay once the legally binding mortgage agreement has been signed by the borrower and other conditions have been fulfilled.
In general, the contracting parties can agree on the terms of payment individually and record them in the purchase agreement. The buyer must present a non-revocable promise to pay from a bank to the notary no later than when the purchase agreement is signed. This confirms that according to the agreed conditions, payment of the agreed purchase price will occur
The transfer of the agreed purchase price usually takes place only after the public notarization and after the entry in the land register. Depending on the payment agreement, the payment is only made in the course of the house handover.
Please note: if any conditions of a payment promise are not fulfilled, the notary cannot register the transaction with the Land Registry Office. Both parties usually agree on a date by which any exclusions must be resolved in the presence of a notary. If these aren’t resolved, the purchase agreement will no longer be valid.
Both the above links read similar to what my original understanding was - the Zahlungsversprechen would be required during the notary.
The more I think about it - I would imagine the mortgage agreement with all the terms is finalised with the selected bank before the notary (with the option of fixing the interest rate anytime upto the mortgage disbursement as already confirmed by the banks).
Yes, there are usually two notary appointments: One to sign the contract, one to exercise the deed transfer. The first appointment is the key one, and the one required to be done physically with the notary.
It is at this first appointment where you need to show proof of your financing by providing the irrevocable payment promise / unwiderrufliches Zahlungsversprechen (IPP/UZ). That is technically not a legal requirement, but no ordinary seller will sign the contract without it. It then becomes a legal condition precedent to pay the seller prior to the transfer of the deed being executed.
Therefore: You need the IPP/UZ for the signing, and you can shop around for the final mortgage afterwards if you don’t want to fix it already. But, be aware that some lenders penalise you jumping board after they provided you the IPP/UZ with some extra fees (i.e. their IPP/UZ is priced high, but this is waived/heavily discounted if you close the mortgage with them).
I’m very confident everything I wrote is correct in Zurich (I bought a neubau within the last year). But that’s why we always ask what Canton someone is in when it comes to real estate
Though I have to say that this part doesn’t actually make sense to me even accounting for cantonal differences. What are the mechanics of this, given the entire point is they can’t be revoked and thus also not replaced? Having two Zahlungsversprechens for the final payment floating around would not be acceptable to the buyer, so I guess the banks just handle this behind the scenes?
What I’m saying is: Your individual experience wasn’t standard, and doesn’t reflect the typical case, even for Zürich.
The key points:
Legally, you don’t need anything in terms of financing to buy a property, i.e. sign a purchasing contract at the notary. You only need the financing to execute the purchase and transfer the deed, which might be much later.
Practically, many will disagree with that first statement, as it is so common to ask for proof of financing prior to/at the signing of the contract, that it is practiced law in many cantons.
In fact, in most cases nowadays, you will need to show proof of financing even prior. Often for signing the reservation, more and more even for simply visiting the potential property.
Proof of financing:
The simplest, non-binding form is the financing confirmation (Finanzierungsbestätigung). This is simply a lender confirming that you are in general able to obtain the financing for the specified amount. This is most commonly what is requested for the reservation of a property or just visiting a property. In some cases, this is sufficient for signing the purchasing contract at the notary if provided by an established lender and fulfilling some minimal criteria.
The formal confirmation, the irrevocable payment promise (Unwiderrufliches Zahlungsversprechen) is legally binding, i.e. the lender confirms that they will finance the property if the conditions precedent are met. This is most commonly what is requested for the purchasing of the property, i.e. signing the contract at the notary. Most lenders will only provide you with this, once you have finalized your mortgage contract with them. Wheater you can then still shop around and switch lender depends on your contract. It’s not common, it’s not advised, it may come with quite some fees, but you can typically get out of the contract by failing to fulfil some of the conditions, and get alternative financing.
Ultimately, what you will need to provide at which point in time depends on the seller. They will put forward their requirements to sign a deal. Likewise, you can (and depending on the seller absolutely should) ask for guarantees for your reservation and/or down payment.
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