Purchasing a home is much more difficult than most people realize

The real estate value, your equity, the first mortgage, and the second mortgage must all be taken into account when purchasing a home.

We’ll describe these various considerations and their various components for you.

The property you want is available in two different values. The first one is the market value, which represents the property’s true worth. The calculation is based on homes that are the same size, quality, location, or similar to those homes. The Market value displays the cost of a home in an average market scenario.

You must pay the Purchase Price to acquire the Home. Real estate is in high demand in Switzerland, but there isn’t a lot of it available. This indicates that the prices are higher than they would be in a typical market scenario. Your mortgage from the bank will only cover the market value; the buyer will be responsible for covering the difference between the purchase price and the market value.

To purchase a home or apartment, you should obtain a mortgage for two main reasons. First, it is practically impossible to obtain your desired object without a mortgage given the current real estate prices. Second, many expenses related to a home are deductible from taxes. Tax deductions are available for maintenance, renovations, interest, and amortization.

The second factor is money, which represents your equity. Your required minimum equity must be 20% because the bank will only lend you a maximum of 80% of the total amount. Two portions make up this twenty percent equity. At least 10% must come from savings, investments, account balances, insurance policies, inheritances, and other sources.

There are two different mortgages, as was already mentioned. 65% of the item’s value, or two-thirds, is the first mortgage. At 18:10. The Swiss National Bank’s interest rate in 2022 is 0%. The first mortgage is unique in that it doesn’t have to be repaid and the debt to the bank is also tax deductible.

The difference between the market value and your equity is covered by the second mortgage. Within 15 years or until you turn 65, the second mortgage must be repaid.