Buying a house or apartment has far-reaching financial consequences. Buying a property is probably the biggest investment of your life. That's why you should prepare the search, viewings, price negotiations, signing the contract and financing well. As is so often the case, the devil is in the detail: a wrong decision can cost you a lot of money. We have compiled the most common mistakes when buying a house and explain how you can avoid them.
Before you start looking for a property, you should think carefully about what is important to you: How do you want to live? Where do you want to live? How much property can or do you want to afford? What plans do you have for the next 10, 20 or 30 years? Set up a search subscription with all the important search criteria that will inform you immediately when your dream house or apartment is advertised. Too many search criteria limit the selection. If you want more search hits, you should delete less important criteria without replacing them. As long as demand exceeds supply, compromises are necessary when searching for properties.
The smart property search by Houzy aggregates 90 percent of all online advertisements in Switzerland and enriches its search results with valuable additional information such as a market value estimate and an estimate of the refurbishment requirements and costs.
In the article "Buy a House or a Flat: Which Suits Me Better?" you will find an overview of important criteria when looking for a property and valuable tips for making a decision.
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Don't eliminate too many search criteria and don't make too many compromises. If you search with too few criteria, you will get too many hits and may miss the needle in the haystack. Try out how the number and quality of hits changes when you play with the search criteria. With the right ratio, you will only get the search hits that interest you and won't waste time on houses or apartments that don't suit you.
In the article "Online Property Search: How to Find Your Dream Home" we explain step by step how you can optimize your property search on the Internet and separate the wheat from the chaff.
First of all, don't buy a house or apartment without viewing it. Not even under time pressure. They say that a picture is worth a thousand words. But pictures can be deceptive. And sometimes lie. So take plenty of time for viewings. When you start looking for a property and have found a few houses or apartments that are suitable for you, view the properties that interest you the least first. This will allow you to get used to the viewing situation and practise what you need to look out for. With practice, you will notice many strengths and weaknesses more quickly. During the first viewing, you should above all listen to your gut feeling.
Prepare yourself with our "Checklist House Viewing" for your next viewing(s). It will guide you step by step through all viewings so that you don't miss anything.
If your gut feeling says "yes" after the first viewing, you should definitely view the house or apartment a second time. Ideally with a property expert who will take a close look at the property and the building fabric from the basement to the roof: Walls inside and out, windows and doors, electrical installations, building services and house connections, water and sewage pipes, heating and water heating, insulation, kitchen, bathroom and guest WC. Older houses or apartments in Switzerland are generally sold "as seen" and any warranty claims are often excluded, as far as legally permissible. At the second viewing, you should listen to your head and the property expert.
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The property market works like any other market: supply and demand determine the price. Because demand exceeds supply, sellers have the upper hand. However, prices have risen less sharply in recent months because fewer and fewer buyers are willing to pay any price. As a result, houses and apartments are being advertised for longer than they were a year ago. Nevertheless, many sellers are sticking to their asking prices. As a buyer, you should now critically scrutinize the asking price. Especially if the house or apartment has been on the market for some time. With a neutral market value assessment such as Houzy's property valuation as a second opinion, you have a good argument for price negotiations.
In our article "Swiss Property Market: Our Forecast for 2024" we explain why we expect property prices to stabilize at a high level next year.
If you are interested in an older house or apartment, a second viewing with a property expert is a must. It is difficult for non-experts to assess the building fabric and estimate the need for renovation - and therefore the renovation costs. Laypersons often underestimate the need for renovation. This is particularly the case if the property has not been renovated or has only been partially or insufficiently renovated in terms of energy efficiency. An (energy-efficient) refurbishment can quickly cost tens of thousands or hundreds of thousands of francs. A property expert can assess how much you can expect to pay and whether the selling price is in line with the condition of the house or apartment.
The listing period for houses has increased by 8 days year-on-year to 61 days, and for apartments by 4 days to 67 days. More and more buyers are no longer prepared to pay any price and are taking longer to make their decision. That makes sense. Under no circumstances should you make a decision under time pressure, even if the seller claims that he or she has prospective buyers who would sign immediately. Take your time for at least two viewings, for estimating the (energy-related) renovation costs and for arranging financing with the bank. If you make a hasty decision, you risk paying too much, having to invest more in the renovation than planned or not financing your home optimally. This can end up being expensive.
Hand on heart: Who likes to study thick documents? But before you sign the purchase contract, you should take your time. Read through the draft contract, look at the land register excerpts, land register documents and cadastral plans, check the investment, renovation and refurbishment register and study the building description, the building plans and the building insurance policy. If you are buying a condominium, you should also study the house rules, the most recent annual accounts of the condominium owners' association and the most recent minutes of the condominium owners' meeting in addition to the regulations. Under no circumstances should you allow yourself to be pressured into signing hastily, there is too much money at stake.
If you want to be on the safe side, hire a realtor to accompany you through the purchase, explain everything to you and check all the documents for you. In our partner network you will find certified realtors, who know all the laws and the regional real estate market.
The most important question when it comes to financing is how much home ownership you can afford or want. If you want to finance a house or apartment externally, you need at least 20 percent equity. At least half of this must be hard equity such as bank deposits, securities or assets from pillars 3a/3b, and a maximum of 10 percent may come from the pension fund. So if you want to finance a house or apartment for one million francs with a mortgage, you need at least 200,000 francs of equity. For the first mortgage, the property is mortgaged up to 65 percent, for the second mortgage up to 80 percent. The 2nd mortgage must be repaid within 15 years, at the latest by the time you retire.
You can find more information on financing in the articles "What You Need to Know about Mortgages Before Buying a House" and "Equity for House Purchase: Five Alternatives to a Savings Account". If your equity is not sufficient, read in "Rent-to-Buy: Get Your Dream House With Less Equity" more about alternatives to traditional financing.
Many buyers underestimate their housing costs because they calculate with the current interest rates, which are low by historical standards and well below the imputed interest rate for the affordability calculation. Most banks calculate affordability at 4.5 or 5 percent in order to protect their customers from rising mortgage interest rates and themselves from defaulting on payments. Depending on the bank, housing costs may not exceed 33 or 35 percent of gross income. They are made up of
If you are retiring in the next few years, you should think now about how you can meet your bank's affordability criteria despite a lower pension income. Read our article on this subject "Mortgage Affordability: What Changes After Retirement?".
Use our affordability calculator to find out whether you can afford your dream house or apartment. If you meet the loan-to-value and affordability criteria, you will receive individual financing offers and can combine the most attractive mortgages from different providers.
Most people spend days comparing prices when they buy a new smartphone or book their next vacation. When it comes to financing home ownership, there is a lot more money involved - yet many buyers do not compare prices and opt for the first offer from their bank. With the right mortgage model, the right term and a sensible division into two or three tranches, you can save several thousand francs a year. Obtain offers from at least three banks, insurance companies or pension funds, compare the offers and negotiate the interest rate. The mortgage interest rates published on the Internet are so-called showcase prices. Many providers make better offers to good customers.
With our mortgage comparison you can compare mortgage models, terms and interest rates with just a few clicks and combine the most attractive offers from various banks, insurance companies and pension funds. This allows you to finance your home optimally and save a lot of money.
Since 2014, banks have been lending on residential property according to the lower of cost or market principle, i.e. up to 80 percent of the purchase or market price - whichever is lower. This has an impact on your equity requirement:
With a fixed-rate mortgage, you know exactly how much your dream home will cost you, down to the last franc. Regardless of the ups and downs of mortgage interest rates. With a money market mortgage, which is based on SARON, you benefit from falling interest rates, but have to expect higher mortgage rates if interest rates rise. The strategy you choose depends on interest rate forecasts on the one hand and your personal and financial situation on the other. You can split the mortgage into two or three tranches and combine the advantages of the different mortgage models. In your interest rate forecast (November 2023), UBS key4 mortgages recommends these strategies:
The banks add a margin of 50 to 125 basis points to the SARON depending on creditworthiness. Good borrowers who easily meet their financial obligations and offer more collateral, such as a bank account or a securities portfolio, benefit from a lower credit rating margin.
The Saron reference interest rate changes daily and can fluctuate considerably. This is why Saron mortgages are suitable for homeowners who have no problem with interest rate fluctuations and have a financial cushion. Those who prefer to calculate safely will sleep more soundly with a fixed-rate mortgage.
