Whether interest rates will continue to rise or fall again in the near future is difficult to judge in the current situation, and anyone who can give a clear yes or no answer to this question is probably in possession of a crystal ball. The current situation in the world is more uncertain than it has been for a long time and every day new events could steer the situation in a different direction.
When financing a dream home or refinancing an existing mortgage, it is much more important to analyse the individual needs and financial situation and choose the right mortgage model. For families with children and a part-time workload of the borrower, it is certainly advisable to choose a model where a clear budget can be defined over a longer period of time. It is also advisable to plan an additional reserve for larger and unforeseen investments. It is also important to make an analysis of the affordability in the event of disability or death, so that in the worst case the surviving dependants can stay in the house and not have to worry about money.
If it is an investment property, a holiday home or if the income is in the higher segment and you have no family obligations, a short-term model is of course also an option.
Rent or buy?
Currently, the question arises again and again whether renting is not cheaper than buying.
If you compare the monthly costs, it may well be that renting is less of a burden on your wallet than buying your own property. For example, with a mortgage of CHF 850,000 and a long-term term, the monthly interest today is around CHF 1,900. Added to this are the heating and ancillary costs, around 1% of the purchase price per year, as well as provisions and any amortisation. So the monthly costs quickly pile up to over CHF 3,500. But before you even get to that point, you first have to save for a few years. With a purchase price of CHF 1,200,000, you already need CHF 240,000 of your own funds. This can be made up of savings, an advance withdrawal of 3a funds or an advance withdrawal from an inheritance. If you have at least 10% of the purchase price from the above-mentioned funds, you can also make an advance withdrawal of 2nd pillar funds. Attention! This has an impact on pension benefits. In the case of rented property, on the other hand, no large assets are required apart from the deposit. If the washing machine stops working or even the heating breaks down, you do not have to finance this out of your own pocket. However, buying a property is often associated with emotions that cannot be easily quantified in the cost breakdown. In any case, it is advisable to always examine such a large investment/decision holistically and to analyse all scenarios in advance. What other costs and fees will I have to pay? What are amortisations and how will my tax bill change?
Do you have questions about the different mortgage models, the compilation of own funds or would you like to know what other stumbling blocks you may encounter? We would be happy to support you with our many years of experience on the path to home ownership as well as the holistic analysis and look forward to hearing from you.