The last time I met with our banks financial advisor I asked him about refinancing our existing mortgage to reduce the equity and give us access to the funds. As we are both retired and are only receiving investment/ pension income it was obvious he wasn’t enthusiastic about such an idea.
I am curious if there are other ways to get access to our money without selling the house.
I’ve heard of plans where you take out predetermined amounts for a predetermined number of years, after that you sell the house. Say you start with 50% mortgage, you take out 3% annually, after ten years you have to sell and get the remaining 20%.
At some age the house often becomes a burden, it certainly did for my parents. Selling can be liberating, and I guess you have ample time to get accustomed to the thought and prepare with a scheme like the above.
Not sure if this can work in Switzerland. At pension age, you cannot get a mortgage above 66% (must own at least 33%). Moreover, how can they force you to sell?
You can refinance, but under the usual borrowing rules:
If the house can be used as collateral, a loan can be taken on it.
Sounds like “Equity Release” in the UK, where a bank will give you a lump sum financed by the bank recovering the sum - plus retrospective interest and charges when the house is sold. This is often upon the death of the owner(s),
I mentioned this to my bank advisor (ZKB) some years ago. He smiled and said this is not done in Switzerland…
Apparently they do.
https://www.moneyland.ch/en/reverse-mortgages-switzerland
I just needed the right term to search for.
Lets see if I can find someone in Romandie that do them.
Hypothèque inversée / Rente immobilière
Also compare with the alternative of moving to a smaller apartment while renting the house . The reverse mortgage has to cover the salaries of the bankers. Not cheap.
I agree, one should look very carefully at all the T&Cs before signing anything. An older neighbor in the USA got a reverse mortgage on her house. Just the loan origination fees and interest ate about $25k of her equity!
Do banks here do home equity lines of credit? In the States, a line of credit lets you access equity as-needed. For example, if your car breaks down and you need a new one, the line of credit extends what you need and you pay it back over a period of time with interest. The advantage is that there aren’t up-front origination or interest costs.
Not exactly what you are looking for but in the Romandie region (and elsewhere) there is the concept of “rente viagère” or “Vente en viagère” whereby the house is put as collateral for a lifetime income all the while the receiver living in the house until death usually. Now the deal is usually pretty poor but it allows the owner to continue living in the house if the revenue is insufficient for keeping ownership of the house.