When you decide to buy a house or an apartment in Switzerland, you do not always have all the necessary equity and it is necessary to seek the help of banks and lenders.
For many people in Switzerland, a mortgage is a necessary step, but when you start talking about mortgages, interest rates, LIBOR etc., it is difficult to understand everything and know directly what is the best solution.
In this article, we therefore provide details on the different types of Mortgages the most common ones to help you choose the one that's right for you.
The basic principle: don't forget that Postfinance can finance you up to 80% of the total value of the property. This means that if you buy a house for CHF 600, you must already have CHF 000 and can only apply for a loan for a maximum amount of CHF 120.
1/ Fixed-rate mortgages with Postfinance
If you want to know now how much interest you will have to repay on a loan with Postfinance, then a fixed rate mortgage is for you. Your monthly loan payment will remain fixed for its entire term. While this protects you against any sudden increases in interest rates, the bank may still charge you a small additional percentage, which means your payment will be higher in the short term.
2/ Variable rate mortgages
With Postfinance variable rate mortgages, the interest rate changes according to the development of the financial markets, so that the mortgage payment can fluctuate and increase or decrease. Due to the law of large numbers, adjustable rate mortgages work out the best in the long run. But if you're planning to pay off your home purchase loan in less than 10 years, it's something you should consider carefully, asking your financial advisor for help first.
3/ Libor mortgages
If you want to choose a variable rate mortgage, you can always apply for a Libor loan.
A Libor mortgage is a variable rate loan that calculates interest based on Libor.
That is to say the interbank offered rate in London, but which caps the percentage that your interest rate can reach.
Thus, the monthly payment of your mortgage loan will be variable and can decrease as well as increase according to the markets, but it can never exceed the defined threshold, so that you will always have a viable monthly payment. You can also decide to switch to a fixed-rate Banque du Léman mortgage to replace it.
The FCA (Financial Conduct Authority), the British financial watchdog, however, only guarantees the fixing of the Libor until the end of 2021. Eventually, the Libor rate will disappear. In the meantime, banks will offer Libor mortgage extensions as well as flexible and attractive financing alternatives, such as SARON (Swiss Average Rate Overnight). SARON is recommended as a new benchmark for money market rates. Its purpose, like Libor, is also to reflect the rates at which banks lend money to each other. Discussions to propose alternatives to Libor are currently underway and Swiss banks are trying to anticipate all scenarios.
Your Postfinance mortgage should always be viable for you and your family. Banks won't let you take out a home loan if your income isn't enough to cover your mortgage payments. So before the bank simply refuses your request, figure out what your monthly expenses are and always take out a viable loan that you can repay without too much sacrifice.
4/ Mixed mortgages
Postfinance allows you to take out mixed mortgage loans, where part of the capital is repaid by a fixed rate loan and another by a variable rate or Libor. You can thus benefit from the advantages of the three solutions and avoid any unpleasant surprises for the future. Find the best rate with INP Finanz: compare the mortgage rates of all our partners in Switzerland with our rate comparator.
INP's best advice:
When you choose to buy property with a mortgage, find your perfect home with the help of our specialist advisors, but then speak directly to your trusted financial advisor to see if you qualify for the coveted property or if you should lower your claims or optimize your income.
With the sending of only 3 documents, we carry out a free analysis and precisely determine your buyer profile.
Within 24 hours, you will receive a non-binding agreement in principle.
A mortgage loan is an important investment for your future and that of your family. INP Finanz Romandie makes it a point of honor to advise you in complete neutrality to choose the best partner for your mortgage loan.
Our goal : help you carry out the projects that are important to you.
Request a non-binding consultation now