Budgeting your own homeWhat will your own home cost over the long term? Here are the costs you should expect to cover.
Anyone wanting to buy their own home must be aware of the costs involved. Let us advise you on how to work out your budget before you buy your own home – for you will only be happy with your dream house or apartment if you can realistically assess both your financial opportunities and your Limits.
More expensive properties – greater financial pressure
Since 2002, property prices have risen in Switzerland by approximately 36 per cent – considerably more than Swiss salaries. Despite low interest rates, banks’ requirements when granting mortgages have remained stringent, and may indeed have become even stricter.
For example, banks require future property-owners to pay at least 20 per cent of the purchase price out of their own pockets before granting them the remaining 80 per cent in the form of mortgages. Banks assess applicants’ incomes conservatively, and do not take into account irregular components such as bonuses or premiums.
Equity capital from loans, savings and pension funds
The funds that prospective buyers can raise themselves to finance their own homes are described as equity capital or capital resources. The more capital resources you are able to raise, the lower your mortgage will be. A lower mortgage will mean that your monthly mortgage interest will be lower.
Particularly for families and younger people, the required 20 per cent equity capital is a huge hurdle on the path to buying their own home. Ten per cent of equity capital should consist of capital resources derived from savings, securities, loans, life insurance policies, anticipatory succession or from vested private benefits (Pillar 3a). You might own a building plot or inherited land that has not been mortgaged and can thus be taken into account as equity capital. Personal contributions, such as work that you carry out on your property yourself, are also taken into account as equity capital – to a maximum value of 5 per cent of building costs.
You can pledge or withdraw 10 per cent of your capital resources in advance from assets in your pension fund.
Our fact sheet explains the most important effects of using pension fund assets to finance your own home.