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

 

 

 

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