Update on the purchase of our apartment

Hello dear FI,

Below some update on where we stand on the purchase of our apartment.

As we are buying on drawing, we have specific budgets for the Kitchen, Bathrooms (2x) and electricity. For the last couple of weeks, we have visited the different companies that must use which are defined by the architect.

Kitchen: our budget is 30k CHF, 2 kitchen builders are proposed. 3 weeks ago, I went to the first one and we just received the final quotation last Friday. We had a good surprise as we are around 500 CHF below budget. Yesterday, I visited the second company, and too my surprise, the design of the kitchen was very different, so I have ask to redesign to be like the first one, which is much more practical and nicer and the electronics (oven, fridge, washing machine) selected was lower models than the first company. So based on this discussion, I don’t think we will work with them.

Bathroom: our budget is 14.5k CHF for 2 bathrooms, a big one and a small one. I must say that after visiting the company that will provide it, this budget is very small, especially as we want to make some changes (Italian shower vs. bath tube) and a double sink vs. one sink. Our budget exploded by 6k CHF to around 21.5kCHF

Electricity: budget not known but we know the number of electric appliance and light points and if you want to see something at night, there is no way that you can just agree with the budget. Therefore, during the meeting with the electrician, I increased the number of electric appliance and light points. The apartment is coming with domotic, I have selected quite nice feature. So I expect the quotation, to increase by 5k to 6k.

So overall for the 3 points of the personal modifications, I estimate that we will be additionally by around 12-13K. Well that’s not a problem, as we got a special discount of 15k when I negotiated the price of the apartment (Discount on our future apartment). So we are still within our budget and we can still buy/update some of the positions.

Later, we will need to chose, the tiles (bathroom) and the wooden floor, but I believe with the budget, we should remain fine.

And you, any news anything particular?

As said, at the moment, nothing happened on the market side, we have not purchase anything as we must recharge our accounts.

Cheers,

RA50

 

Yes, we have signed the contract for the building of our apartment

Dear FI,

Another step in our objective to own an apartment in Switzerland, we have signed the construction contract with the architect as well as we bought the part of the land that we own based on the surface of our future apartment.

I must say that we are very happy but at the same time, a bit stressed because you know that now you have a big debt to the bank and that you hope that nothing will happen: lost of my job, accident, and worst death. so yeah, doing this crazy purchase is quite stressful.

The construction of the building has started 2 months ago with first, the destruction of of the old house. Then they dig around 10 meters for the foundation and the garage. So there is not much except a big hole in the middle of the city.

Looking forward to see some part of building coming up the ground.

I will update you soon with our financial.

Wish you a good weekend and best regards

RA50

2015 final tax declaration

Dear all,

Long time not having wrote a post, but nothing really interesting happened, market is so volatile that we are hesitant to enter. anyway, we don’t have too much cash available as a big chunk of it is reserved to buy our apartment (Mortgage for our new apartment).

Right, so let’s come back to the purpose of this post, 2015 final tax declaration. If you follow us, you will see that last year was a very good year in term of revenues:

Therefore compare to 2014, our total revenue is significantly higher and I was started to be scared of how much, we would need to pay for the reconciliation our tax declaration. If you remember, we had a very surprise in December 2015 when the tax office declared that we paid to much tax in 2014 (around 15k- Christmas present before the 25th).

So today, I received from out tax guy a fairly good news, that he is expected that we need to pay 1715 CHF additional taxes.

So now we need to wait that the tax office compile and confirm our declaration and final payment.

In the next days, I will have some new posts as we are moving into the process our purchasing our apartment, so stay tuned.

Cheers and good weekend.

RA50

Discount on our future apartment

Dear all,

I hope everybody, is doing fine in this fluctuating market?

As you know, we are in the process of purchasing an apartment in Switzerland. 2 weeks ago, the architect office responsible of the whole project offered a discount on the remaining apartment, as it was probably difficult to sell them all. When I saw that, I jumped on my phone and called our contact and request some general explanation on the status of this project and at the end, I mentioned that I saw the price reduction and I wanted to know if they could do something for us. The person said that we were able to select the best apartment before everybody else and that only the less attractive lots remain, she was not sure, she could offer us a price reduction but she would come back to us.

So Last Friday, the person contacted me and says that they cannot make the same discount that for the remaining lots (2.5%), but she can give 1% or 15K CHF in our case. As I was not expecting to get something, I am very happy with the results of this quick phone call, this reduction, will allow us to buy extra stuffs when we will move in.

By the end of the month, we should have signed the contract and started to spend our own equity. I will keep you inform of this.

Cheers and good Sunday.

RA50

2015 Bonus (Variable Incentive Compensation)

Dear all,

This week was the big week as we received our 2015 Bonus and last year, I was very happy with my bonus (Yes, Yes and Yes).  Guess what, this year it’s even better!

The company I work for had a great year, all financial metrics were above the objectives and as the bonus takes into account the company performance x my performance x my rate based on my job description (Functional move – Positive financial impact) and my own performance was quite good.

So the results is that, we get a bonus of 53k CHF; yes, you read it right correctly half 100k. Ouhaa, when you look at your paycheck and it’s 3.3 times more than the previous month, it makes you a nice smile on your face🙂.

And it’s great news, because that goes straight to our account for the purchase of our apartment. So it’s an excellent start of the year, I am already thinking of the next year bonus, hopefully it will +/- equivalent.

What about you, do you variable incentive compensation? is it based as well on your performance? And when do you receive it?

Wishing you a good weekend,

Cheers,

RA50

Difficult not to invest

Dear all,

As me, you are probably on the edge to know if it’s the right time to invest considering the significant market fluctuation.

As said in our previous post, we are going to invest in an apartment, so we had to sell quite a lot of our position to have enough cash for the requested 30% of own equity. Therefore, we are sitting on slightly more than 400’000 CHF. In a way that makes me crazy, we could have invested quite a lot especially when the market dropped by around 10-15%.

On top, we are close the dividend distribution, so we could have make good money but I cannot take any risks at this moment and risk to have the cash at disposition because market drop again.

If we were in this situation, what we would have bought? We would have invested in Swiss RE for the high dividend yield, Roche and Novartis and probably Nestle, even if the 2015 results were not extraordinary but the potential is there.

So we are looking at replenish our broker account to be able to reinvest but we start almost from scratch, hopefully our positions will give us around 10’000 CHF, thanks to UBS and Credit Suisse that will distribute their dividend from their reserve and therefore not subject to taxes, that’s good for us.

Next week, I will receive my annual bonus, so part of it goes for the apartment and the other to our broker account. I will give more details in the next post.

What about you, have you been able to pick to drop to make some shopping or are you waiting for a more stable market situation?

Cheers,

RA50

Mortgage for our new apartment

Dear all,

Let me give you some information regarding our future new apartment:

It is a new construction and the completion is due in autumn 2018. Yes, you read it right 2018, so a certain number of article will be published until we move in🙂.

As you already know based on several previous posts, everything is very expensive in Switzerland and it’s not surprise, houses, apartment and construction follow the same rule. So please attach your seat belt, we are purchasing a property for an amount of 1’535’000 CHF, yes, 1.535 mio. CHF. If we put all our wealth + our pension fund, we still missing around 90’000 CHF!

Clearly, we need to go to the bank to get a mortgage. By Swiss law, 20% of this purchase price must come from own equity, so 307’000 CHF, so you think that’s ok, fairly easy to get in our case. But when, you go to see the banker, he says that the loan need to consider additional information, like your salary, family situation (kids, wife working, etc.), so the 20% transform to 30%.

In discussion with the banker, we added 55’000 CHF to the purchase price to cover the notary fees + some additional reserve, so final price will be 1’590’000 CHF. We decided to put 530’000 CHF of own equity; therefore our mortgage will be 1’060’000 CHF.

I mentioned that the building need to be constructed, which mean that we cannot have a regular mortgage but a construction mortgage that will be transformed in a regular mortgage when we get the key of our apartment. Unfortunately for us, the construction mortgage is more expensive than the regular one😦 we get it at 2.5% compare to an average of 1.7% for the regular one). The only positive point, is that loan enter in action only when the constructor need the money, and based on pre-defined schedule, 10% at the start of the construction, 20% when the first floor is completed, 30% when the 4 floor is completed, 30% when the windows are fixed and 10% at the key delivery. So we don’t pay interest on the full amount until we get to the end.

Something that we didn’t know is that the notary fee is of 5% of purchase price, so in our case it would have been 76’750 CHF but as we are construction mode, we just need to pay the fee based on the ground price, which is 322’000 CHF and therefore the notary fee will be only 16’100 CHF, which is an economy of around 60’000 CHF, that not bad and was a good surprise.

We will sign the contract in April; you will get more details on further posts.

Cheers, RA50