What if you scrimp and save and manage to send them an extra 200CHF/month - does that come straight off the capital, or is it still mostly interest like your main mortgage payment?
We got our mortgage with ZKB and I found them to be very professional and competitive.
To continue the example, if you pay off 200 per month extra, then for year two you will have a mortgage of 497,600, so your interest costs will only be 995.20 per month in year two. If you keep paying 1,200 per month, then you will pay off another 2,457.60 in capital in year two, leaving a mortgage of 495,142.40, so in year 3 the interest would be only 990.28 per month, etc., etc.
The Small Print:
NB this assumes you are on a fixed rate deal at 2.4% and that they recalculate the interest costs only once per year. Some mortgages may recalculate interest costs daily/monthly which would make the actual amounts slightly better.
One way of lookin gat it, but once the first 1/3 comes to an end you can always "pay" it off either the hard way in cash or go to another bank and get a mortgage for this 1/3.
You can then promise bank N°2 you'll bring the other 2/3's at a later date as in a similar vein you promise Bank N°1 you'll bring that errant 1/3 back if they behave and reduce their rates
BTW I just read that at Coop you can get a 0.25% reduction on your mortgage for 25000 Supercard points, which seems quite good...Or had you already factored that into the 2.4%?
The employer pays the 1% themselves, so it may well apply to employers beyond banks and insurance...
I won't get back the CHF 290 I spent on the Comparis marketplace, but its turned out to be an excellent bargaining tool.
http://www.bankcoop.ch/hypotheken/hy...onditionen.htm
2.130 % p.a. for a 5 year mortgage (at Coop)
Not bad
Swings and roundabouts really, although over the very long term you should benefit and of course you have the option of being smug about the fact that your house is "greener" and more eco friendly...
Only tip for negotiations I can give is to start out from a 3-month rate and negotiate how many basis points you would pay on top of the 3-month LIBOR. A good offer is somewhere between 50-70bp - that means if the 3-month LIBOR is at 0.4% you would pay 0.9-1.1%. Based on this spread, you can then calculate also how much you would pay for a 3 or 5 year fixed rate.
The offers you find on comparis, etc. are not too relevant since the pricing of mortgages is done based on your personal risk profile.
I am a mortgage newbie in Switzerland and really struggling with the rationale behind the argument that in Switzerland it is tax-beneficial to have a mortgage. Hoping that someone here can help?
We have found a nice little flat for just under 1m (let's say 1m for ease of calculation) and we are currently considering two scenarios - paying for the property outright (with a big help from our parents) or taking a 50% mortgage 1 (i.e., interest only payments). The two bankers that we have spoken to (CS and UBS) insist that the mortgage 1 is a better deal than outright ownership... but we calculate our total annual outlay as follows:
.................................................. ...Scenario 1 .........Scenario 2
================================================== =
Mortgage 1 amount .......................................0 ...........500,000
Net wealth, property-related ...............1,000,000 ...........500,000
Wealth available to invest
otherwise .................................................. ..0 ...........500,000
================================================== =
Interest expense
(very bad case of 5%) ...................................0 ...........-25,000
Tax@30% on valeur locative/
Eigenmietwert/ imputed rent of
3,500 per month (42,000 per year)
less property-related expenses ................-12,600 .............-5,100
Property-related wealth [email protected]%
on net wealth (less debts) .......................-3,000 .............-1,500
Interest income assuming
investment@2% (pretty generous?!) .................0 ...........+10,000
================================================== =
Total damage .......................................-15,600 ...........-21,600
I am making some assumptions about tax rates and such, also not including annual maintenance expenses@1% as these would net out to equal numbers in both scenarios as far as I understand it. But these should be relatively minor adjustments in any case.
Are we missing something really big here? We figure that there must be some reason why it is so widely reported, and indeed even done, to hold a mortgage 1 in Switzerland pretty much until you pass it on to your children. But somehow the numbers don't seem to add up when we try.
While this is an old thread, I would be deeply grateful to anyone who could help to shed some light on this as we (and our bankers) are pretty confused!
Many thanks and best regards,
The commonly missed point is that maximising tax efficiency is often not equal to maximising financial efficiency. You *may* pay less tax, but you pay instead mortgage interest, fees etc.
In your example you show a mortgage costing 5% compared to an income from the saved capital of 2%. Ignoring taxes, the maths there surely is easy. If you can invest your saved capital with closer to or better than 5% return, the equation changes. If you then include taxes you must consider your personal marginal rates for income (earned and unearned).
A few observations
- why do you think the Eigenmietwert is less if you have a mortgage ?
- in your calculation i would not consider 'net wealth - property related'. You have 'wealth - property related' (on which you pay wealth tax, alongwith your saved 500k in scenario 2), you then have 500k have debts in scenario 2 on which you receive income tax relief on the interest
- you don't explicitly include capital repayment of the mortgage, but i assume you included that in the 5%
What happens if you change from "very bad case" to "very good case" to "in the middle case"? How many years can we get the "very good case" as opposed to the very bad case? How good are you at investing else where? (I'm bad at it! ) What else could you do with the money? etc.
Personally, I don't think I'd put all my eggs into a house. It's just feels so wrong!
Another thing I see is that you changed the "wealth tax" amount as well. You still pay taxes on the other 500K even though it's in cash. So that number should be the same as well.