Renters in boom markets complain that they are wasting money but often do not take the time to calculate all the costs and risks. Ignoring capital gains and losses, the annual cost of renting is often cheaper than being a house owner with a mortgage. Renting also gives the feeling of freedom and not being tied allowing the client to move quickly if an out of town job opportunity arises or a noisy neighbour moves in. Having said that there are obviously benefits to home ownership beyond the financial, like peace of mind and a feeling of stability. Owners cannot have their home taken away by a landlord who has decided to move back in. Owners can also change the colour of their living room walls or redesign their garden without asking permission. After becoming a homeowner few consider the concept of renting ever again.

Calculate your budget – Whilst the price of the new property is immensely important the other costs must be taken into consideration or you will soon be in trouble. If you take on a mortgage, then you must add interest into the equation and if you choose a variable mortgage then budget a reserve to allow for a possible increase in interest charges, which can amount to a significant sum. On top of that, you have the following fees to pay: Notary, land registry, insurances, bank arrangement fees, surveys and change of ownership tax. The costs of moving, decorating and additional furniture should not be underestimated. In Switzerland to avoid any surprises we strongly recommend you calculate the cantonal and municipal taxes before moving to another area. We find the question of tax is one of the most important issues for ex-pats. The main types of mortgages are variable rate, fixed rate and libor. It is possible to negotiate with lenders but leave yourself with enough time to shop around. Discounts of up to 0.6% are possible off the published rate.

Downpayment – Banks prefer to lend a maximum of 80% of the purchase price which can leave many buyers short of cash. The Swiss government decided to promote property ownership and have changed the law to allow capital saved in a company pension or blocked pension account to be used for the following:

i) house or apartment purchase ii) property purchase and construction iii) mortgage repayment

Important: The property must be used as the main residence.

Bank acceptance – Before viewing properties we recommend you provide the bank with financial information including last years tax form, your current salary confirmation and if possible an approximate budget. Details of your assets including your company pension should also be submitted. The bank will calculate the maximum amount of mortgage they are prepared to lend to you. This approach means that you can search for and view houses within your financial means. It is best to negotiate the discount at this point.

Determine your needs – To avoid spending your precious weekends with real estate agents often viewing inappropriate property we recommend you prepare a checklist. This should include for example: location, house or apartment, leasehold or freehold, style of property, number of bedrooms and bathrooms, square area in metres, proximity to school, shops and public transport. Don’t forget to include points on the list that may not be important to you now, but could be decisive when you wish to sell the property.

Searching for property – The most efficient ways of buying or selling property in Switzerland are newspaper advertisements, Estate agents and internet. Auctions are not very common and are quite complicated and definitely not for the faint-hearted.

Make an offer – Once you have found your dream property buying at or below the market price is extremely important. If possible compare with similar properties in the area as this will give you a rough guide. Making an offer is a delicate subject and no rule applies however in our experience an offer of up to 5% below their asking price will not insult the vendor. An important factor is the length off time the property has been on the market. If more than 6 months then we suggest an offer of between 10% and 20% below the asking price. Initially the vendor might be unhappy with the offer but given time might realise the price could be the reason for the lack of interest. In Switzerland supply and demand is regional therefore research and local market knowledge is very important. Despite this if you are intent on buying a particular property then you will probably end up paying the asking price. Negotiate the property exchange date to avoid paying interest or rent in two places. If the vendor insists on signing immediately then suggest a splitting of your costs. The vendor or estate agent will usually tell you they have other prospective buyers and ask you to sign a reservation contract and pay a deposit. We recommend you take your time, gain professional advice and don’t be rushed into a decision.

Next steps – Once you have agreed terms ask the vendor to provide a draft contract and comprehensive property details for your bank. For standard property below CHF1.5 million the bank will take around 14 to 21 days to give their decision and provide a bank guarantee. A luxurious or protected property will take a few days more if a valuation is required. The cost of a valuation can exceed CHF1000 but often the bank will cover the cost if the mortgage is taken out with them. Once the mortgage is approved the contract signing at the notary’s office can take place which is usually quite simple. In Switzerland, despite usually being appointed by the vendor, according to law the notary must not favour either party. Using the same legal representative often makes expats feel uneasy feeling therefore if you do not speak the local language it is advisable that your IFA attends because the contracts are written in the local language. It is possible to have the contracts translated into legal English but it is costly. Once the contract is signed the notary handles the formalities with the local government.