As one of the wealthiest countries in the world, it's no surprise that practically everything is expensive in Switzerland. Whether it's gadgets or clothes, or even food, many of them cost a pretty penny. Of course, this especially applies to real estate too! Buying a
property in Switzerland is no joke. It'll cost you an arm and a leg to purchase even small real estate. What more when it's bigger than, say, a studio apartment? To help fund this endeavor, you'll need to get a mortgage in Switzerland. Here's what you need to know about it, from the conditions you have to meet to the things you have to do!
What Conditions Do Foreigners Have To Meet?
To say that Switzerland is strict when it comes to lending out mortgages is an understatement. Many Swiss banks and other lending institutions require you to pay a 20% (10% of which has to be real money)deposit before they'll let you borrow any money. And that's for everyone, including the citizens. What more if you're a foreign non-resident? What other conditions do you need to meet to get approved for a mortgage? You will need to appropriate license/permit to purchase real estate in Switzerland, have close ties with the country, and have a suitable reason to buy a property here.
What Are The Different Types of Swiss Mortgages?
According to
Expatica, there are four main types of mortgages in Switzerland. There's the fixed-rate mortgage where, true to its name, the interest rate remains the same all throughout your mortgage term. A variable-rate mortgage, on the other hand, adjust depending on the interest rates. This will also mean that your monthly payments can go up or down depending on the said rate. The more unique kind is the London Interbank Offered Rate (LIBOR) mortgage. Though largely similar to the variable-rate mortgage, the interest only changes at the end of the agreed rollover terms. And finally, there are the offset mortgages. This allows you to combine your standard mortgage with funds from your other
local accounts in the same Swiss bank.
What are The Common Mortgage Rates Here?
Now let's talk mortgage rates. As you might've expected, the different types of Swiss mortgages also come with different rates. But be that as it may, this will still vary from bank to bank. It's up to the financial institutions themselves on what your mortgage rate will be, regardless of what kind of mortgage you got. Usually, the rate for fixed-rate mortgages is around 1% to 1.8%. For variable-rate mortgages, on the other hand, the standard is 2.8%. And for those who got the London Interbank Offered Rate (LIBOR) mortgage, your rate will be around 1.05% to 1.10%.
What Are The Mortgage Costs and Required Documents?
Similarly to when you purchase real estate in Switzerland, the process of applying for a mortgage here comes with a few important costs and required documents. For the former, they're practically the same as in the purchasing process: land registration fee, property transfer tax, notary fees, and administration costs. For the latter, you will need to present your valid ID (passport will do), proof of income, your most recent tax returns, bank statements from the past two/three years, and details on the property you're planning to buy. Some lenders will also ask for your proof of credit check.
How Do You Repay Your Mortgage in Switzerland?
With all that has been said, how do you repay your mortgage in Switzerland? Well, once your term starts, your mortgage will be divided into two. The first will cover around 60% to 65% of the final property price. This has an indefinite repayment period, which means you pay for it as long as you can. The second mortgage will typically cover around 15% of the final property price. Contrary to the first mortgage, this second part will have a definite repayment period, usually around 15 years. Basically, this means you pay to pay 1% of the mortgage every year for the first 15 years.
Buying your own property in Switzerland will cost a lot of money. Your best bet is to get a mortgage here so you can afford it. Learn the basics about this process so you can do it properly when the time comes!
