I suppose the answer, but I would like to get some ideas. How did you do it? If I don`t need a huge amount, can a personal loan be taken out?
Can you get a loan from a swiss bank for a house abroad which is in another EU country, if you are a citizen of that said country but reside and work in Switzerland?
Short answer: Yes
Long answer :
For a foreign mortgage, most banks will want you to have the full value in your bank account. I got a foreign mortgage for a buy-to-let house in London at VERY convenient rates (especially considering the current interest rates in the UK), but I have the full amount "available" in my account... I just didn't want to drain the account. There's a few threads on this on here, and before you ask, the bank was Habib.
For a personal loan, look at things like "lend.ch". Rates are MUCH higher, but on par with mortgages in the UK at the moment.
That is what we call a back to back loan, which basically means it's not a loan and pretty much any bank will be delighted to do since it's a nice fee with no risk for them.
What's the catch? If your money are essentially blocked it's like paying for the purchase with your own money but adding the bank fees on top
We have recently engaged in a comprehensive discussion regarding this matter on an expat forum representing my home country in the EU.
The consensus was as follows: obtaining a mortgage for a house in our homeland was impossible.
However, there is an alternative solution: to acquire a general loan from a Swiss bank for more or less unspecified purposes, allowing it to cover a portion of the expenses involved. This approach may be viable if properties in the country of purchase are more affordable compared to Switzerland.
Not sure about the legal side, if that's what they did wasnt on the edge of the law though.
This might help:
https://www.linkedin.com/pulse/every…diminas-butkus
A back-to-back or Lombard loan comes with many benefits. One of the biggest ones – your assets remain invested while you get additional liquidity.
This didn't throw any light on that but thanks. My quick understanding is that if you pledge against your liquid assets they are blocked, not liquid anymore sure, it helps for situation as outlined in the article, to avoid withdrawing from investment (but that investment conceptually wasn't your liquid asset as you didn't want to withdraw from it), nvm
Just remember, the Swiss bank is going to take ZERO risk and security on a property abroad is not really considered as security.
Maybe your money is on a savings account which has some non-zero and non-negative rate - maybe you want to keep it, but also want to buy a property. I don't know much about the rates for a Lombard loan, but it makes sense if the rates are lower than on your savings account.
A Lombard loan is basically a loan against assets you hold with the bank. One of the catches when borrowing to finance a property is the currency risk, though admittedly the CHF is one of the strongest currency's making a potential payback cheaper - provided you borrow in the currency of the country where the asset is located and not in CHF.
When the bank secures the loan against your assets, the assets are not totally blocked. While you cannot move the money out, you are free to buy and sell those assets, for example you sell your Nestle shares to buy Novartis ones. Additionally any gains you make on your portfolio, such as option premium, dividends or capital gains, you are free to withdraw, so long as the assets are covering the loan by the percentage you have agreed with the bank.
So a Lombard loan makes good sense when used for borrowing against a well structured portfolio but for buying a property I'd personally rather use a good broker in the home country to help arrange the mortgage, and maybe use the loan for paying the deposit required.
It's not fully blocked... I can still buy shares (as long as the bank holds them), invest in bank-managed schemes or put the funds in a fixed-return long-term account.
This way, I can get 3-5% from the cash in the account (locked for 5-10 years), minus the 1% approx mortgage fees.... meaning I still get some money from my funds PLUS the rental income from the property (which works out to roughly 5% of the property value after UK taxes and agency fees). I then set aside 1% for unexpected maintenance costs.
Overall result, you basically double how much money your money generates...