Frequently asked questions

To prepare for a property purchase, you need to assess:

The amounts you have available to finance this purchase, i.e. your own funds

The amounts you need to find from a lender (e.g. a bank), i.e. foreign funds

Starting from the market value (see above) lenders will ask you for at least 20% of this amount to avoid you being exposed to financial charges later on. bank), or foreign funds

Starting from the market value (see above), lenders will ask you for at least 20% of this sum to avoid exposing you to excessive financial charges later on.
In fact, the credit company will finance you at a maximum of 80% of the lower of the purchase price and the bank's valuation of the property. 
A waiver is possible with a 90% loan if you put up a BVG guarantee and forgo withdrawing it. 
On the other hand, the bank will always require you to calculate your expenses. 
In the case of a 90% loan, the expense ratio is adjusted upwards as the loan increases.

Liquid assets: Your savings, gifts from relatives, advance on inheritance, etc.

Personal contribution: Work you can do yourself and/or preferential purchase prices for certain materials can be treated as equity.

Free vesting of 2nd pillar: BVG, pension fund.
Until the age of 50, the amount available is capped at the vested benefit (consult your BVG certificate).
Beware, there are constraints:
the vested benefit can only be used once in any 5-year period,
the minimum amount is CHF 20,000,
from age 50 onwards, the maximum amount is that to which you were entitled at age 50, or half the vested benefit to which you are entitled at the time of payment. (art.30c on vested benefits from the law on occupational benefit planning)
In addition, you need to assess the impact that withdrawing your capital will have on the income to which you will be entitled at retirement age.

Cash surrender value of a 3rd pillar (life insurance: This is the capital built up by payments into a life insurance product, from which fees and the cost of the various risks covered are deducted. The calculation of the surrender value can be provided to you on request by the insurance company.

3rd pillar account with a bank: As no risk coverage is included in this type of product, this amount is generally fully available.

The use of 2nd and/or 3rd pillars for real estate financing triggers the payment of capital tax. Depending on the canton and municipality, this tax varies from 0.5% to 12%! This bill is issued directly by the tax authorities, so you need to have the cash available to pay it. The desired amount of paid-up capital is paid directly into an account managed by the notary.
The withdrawn capital cannot be used to pay its own tax called "vested benefits tax"

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Please note that withdrawing capital from your LPP will reduce your 2nd pillar benefits.
You can ask your pension fund to draw up a document that will show you the consequences of your possible withdrawal. 
On this document, you will be able to compare your benefits before and after the withdrawal.
Also take advantage of the opportunity to request an offer to compensate for the risk portion, i.e. death and disability, if necessary, through periodic payments.
Plan to include these payments in the calculation of your expenses. 
Note that the retirement portion can be offset by the amortization set up (see below, indirect amortization).

The breakdown of these different combinations of funds varies from lender to lender. Some may require you to provide half the funds through cash and the other half through a 2nd or 3rd pillar. Some may accept the whole from a 2nd or 3rd pillar, subject to review.

An alternative solution may be chosen, which is to pledge your 2nd or 3rd pillar. You can pledge all or part of your 2nd or 3rd pillar. This makes it possible to obtain financing in excess of 80% of the purchase price. The products continue to evolve in their environment, earning interest, offering benefits and covering risks as before, and above all, you are not required to pay any tax, since you have not withdrawn any capital. But beware: the loan you are offered is higher, and so are your expenses. On the other hand, the additional interest increases your tax deduction. A precise calculation is essential to determine the best solution for your personal situation.

As mentioned above, lenders generally grant loans covering 75% to 80% of the object's value. A pledge or surety can in some cases go beyond 80%. This depends on the customer, the object and, of course, the surety.

A cédule hypothécaire certifies that the claim is secured by a real estate pledge. In the event of bankruptcy, this claim will be given priority over all others. This is why lenders ask for mortgage cedules constituted by a notary.

The loan involves different levels of risk for the lender. Each has its own interest rate. These levels are called "ranks". The 1st rank is constituted between 60% and 66% of the value of the property. Its rate is the benchmark for all mortgage lending institutions. The second mortgage, which represents the balance of the loan, has a rate that can range from 0.5% to 1% above that of the first mortgage. Nowadays, this distinction is no longer made as clearly, but the level of indebtedness continues to have an impact on the interest rate of the loan.
It is imperative to carefully compare the different offers from lenders on the market. There are several products on offer, with different rates and conditions to suit different family situations. What's more, these conditions change regularly over time. So it's important to keep track of these changes and, where possible, to anticipate them.

The support of a neutral advisor, who can tell you about the different market conditions, while considering your personal situation is an asset.

Property value : 900'000.-
Equity : 180'000.-
Loan : 720'000.-
1st rank (65% of property value) 585'000.-
2nd rank 135'000.-
10-year rate (March 2021) 1st rank: 1% on 585,000.-
Interest on 1st rank: 5,850.-
10-year rate (March 2021) 2nd rank: 5% on 135,000.-
Interest on 2nd rank 2,025.-
Total annual interest 7,875.-

The costs associated with the purchase are generally around 5% of the value of the property. These costs include:
Transfer duties
Setting up mortgage cedules
Notary fees
Land registry fees

If cedules have already been set up, it is not necessarily necessary to set up new ones. If you are buying a plot of land before building a property on it, the fees are calculated on the value of the land alone. All these points need to be studied in detail.

Today, most lenders will not finance these costs. It is therefore important to provide sufficient liquidity to pay these costs in addition to your equity participation.

As mentioned above, a tax is charged if you use your 2nd pillar or 3rd pillar as a cash contribution to finance your property purchase.
Beware, if you were to resell the property without reinvesting in a new purchase, the amount withdrawn from the 2nd pillar will have to be repaid to the pension fund. In this case, however, you can claim a refund of the tax paid on the withdrawal. It's up to you to keep proof of tax payment and to bring it with you when you sell.

Please note that reservation amounts for the purchase of an apartment, i.e. the 10% usually required, are difficult to finance with a pension fund. This is a complex operation, subject to acceptance by 
the fund and, above all, to repayment in the event of non-purchase. In the event of bankruptcy of the construction company, lost down-payments paid by a vested benefit must be reimbursed to the fund.

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When buying a property, the resulting financial charges must be kept to a realistic and acceptable level. Since a drop in income is to be expected in retirement, it's essential to introduce a notion of amortization, which allows the debt initially contracted to be gradually reduced.

As a reminder, the charges when buying a property are made up of:

mortgage interest. This is the interest on your loan.
amortization. The reduction or amortization of your debt.
all fixed charges: heating, condominium charges, property tax etc.

The aim of amortization is to reduce your debt so that it is made up as much as possible of your 1st rank (between 60% and 65% of the value of the property) when you retire.
There are two ways of achieving this: direct amortization or indirect amortization.

To determine the financial capacity of the future owner, credit institutes use a rate of 7%, which includes:

5% for interest on the debt
1% amortization
1% property maintenance costs

Mortgage debt is repaid on a regular basis, which reduces interest, your expenses, but at the same time increases your taxes (by reducing debt and interest in your tax deductions). In fact, the interest you pay is deductible from your income, and balances out the fact that the taxman adds fictitious rental income (rental value) to your real income. As this rental income remains constant, or even increases, if your interest payments fall, your net income tax will obviously rise. As far as your assets are concerned, the tax authorities have assessed the tax value of your property, from which your debt is deducted. When you reduce your debt through direct repayment, your wealth increases, and so does your wealth tax. The impact of the latter is relatively small.

In this case, the amortization is replaced by a life insurance policy, which is pledged to the lender. (Pledge: original deposited with the lender so that he can control its follow-up and existence until the end of the contract). There is therefore no reduction of the debt, i.e. no amortization with the lender during the term of the policy.

Direct amortization / Indirect amortization

Protection in the event of death or
disability: none integral 
Mortgage debt: constantly decreasing
Mortgage interest: constantly decreasing
Tax burden: constantly increasing

Only at the end of the life insurance contract will the capital thus accumulated be used to amortize part of your debt.

Unlike direct amortization, you therefore maintain a constant tax burden, in balance with the constant rental income. What's more, as the insurance policy is part of the 3rd pillar, the premium is also tax-deductible.
Last but not least, indirect amortization provides family protection. Life insurance products can include risk cover for your family in the event of death, or for yourself in the event of disability. In fact, these tragic situations are painful enough to avoid financial disaster. Pure risk insurance can be taken out to provide protection in the event of death or disability in cases of direct amortization, and avoids the absence of coverage at this level.

IN SUMMARY:

Thanks to indirect amortization:

Tax advantage: 
Lower and constant income and wealth tax.
The insurance premium is added to deductions.
For the same amount of amortization: 
Larger debt amortization over time (although tax is levied on the paid-up capital at the end of the contract), so lower rent in retirement.
Provident coverage: 
Death protection included.
Disability protection included.

Depending on where you live and your family's income, a precise study will enable you to benefit from a tax advantage over the overall term of between 30,000 and 80,000.

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In addition to interest on borrowed capital and amortization, homeowners have to pay other costs. These are estimated at 1% of the purchase price. The items that make up these costs are:

• Heating: more or less expensive depending on whether it's oil, gas or electric.
• Taxes and fees: garbage disposal, water tax, connection tax
• Taxes: property tax
• Maintenance: chimney sweep, drain cleaning, garden maintenance, elevator
• Insurance: building, fire, water damage, etc. insurance. In condominiums, major renovations are generally financed by the renovation fund. Thus, a charge for allocation to the renovation fund is part of the condominium owner's charges.
• Renovation: provision for future renovations

In the case of a condominium (e.g. PPE), most of these costs are included in the condominium charges.

Let's take the example of a 900,000-euro property, for example: you're looking at an additional 9,000-euro annual charge

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In summary, based on the example of a 900,000.-

1st rank interest rate: 1%
2nd rank interest rate: 1.5%

Bank interest: 7,875.-
Depreciation:9,000.-
Charges: 9,000.-
If using BVG:
Supplementary insurance 800.- *

Total annual: 25'875.-
Total monthly: 2'156.-

If you have used your 2nd pillar for your own funds, this will result in lower death and disability benefits. Your caisse can offer you supplementary insurance to compensate for this reduction. This insurance enables you to maintain your initial benefits despite the withdrawal. This insurance will be billed to you by the fund. This amount varies from case to case. In our example, this figure is an estimate.
In the event of an increase in the mortgage rate, it is prudent to assess the rise in your costs. That's why credit institutes calculate your financial capacity with a financial maintenance of 7%, including 5% for interest. This is achieved if the amount of financial charges does not exceed 1/3 of your income.

Using the same example, we arrive at the following result with rates of 4.5% and 5%, for 1st and 2nd rank respectively.
Interest rate 1st rank: 4.5%
Interest rate 2nd rank: 5%

Bank interest: 26'325.- + 6'750.- = 33'075.-
Depreciation: 9'000.-
Charges: 9'000.-
If using BVG: 
Supplementary insurance 800.- *

Total annual: 51'075.-
Total monthly: 4'256.-
 

• Technical: architecture, quality, condition, maintenance
• Economic: market, economic and political context, ...
• Legal: private and public
• Tax: tax regulations

• Purchase, sale, exchange of real estate
• Inheritance division, gift-sharing
• Leaving the community, d'indivision
• Attribution préférentielle prévue par la loi
• Tax returns
• Declaration of inheritance
• Declaration for solidarity tax on wealth
• In the commercial lease environment

• Setting renewal rent
• Setting the eviction indemnity
• In the social life of the company

• Mergers, contributions, disposals, purchases
• Establishment of balance sheets
• Special obligations of insurance companies
• Loan appraisals

• Appraisal of bank guarantees
• Determination of starting price, auction support in case of sale

A distinction must be made between property insurance, third-party liability (TPL) insurance and other insurance.

1. Property insurance

Property insurance covers damage to the insured's assets. It is limited to the building itself.

What is a building?

Any immovable product resulting from construction activity, including its integral parts, covered by a roof, containing usable premises and built as a permanent installation. Certain exterior structures can also be insured along with the building. These include fountains, wells, swimming pools, fencing walls, etc.
Integral parts

These include kitchen fittings, elevators, escalators, heating systems, sanitary installations and the like.
Building under construction

It can or must be insured against certain risks such as fire, natural damage, construction work, water damage, etc.
Completed, delivered building

Some losses (fire, water, natural damage) can be insured; others
are added (rental income, building liability, accidents for the janitor, burglary, glass breakage, etc.).)

Fire and natural elements insurance

Cover includes losses due to:

Fire 
Lightning
Explosions
Smoke
Falling aircraft or parts thereof 
Natural elements (landslides, rock falls, landslides, avalanches, excessive weight of snow, snow slides, floods and high waters, hurricanes, hail, meteorite fall)

In principle, buildings are insured at replacement value, which corresponds to the cost, at the time of taxation, of a similar, new building erected on the same site. To avoid underinsurance, i.e. the sum insured becoming insufficient over the years, this will be adjusted in line with the construction cost index.

Water damage insurance

The following damage is insured:

Water from pipes and installations
Rainwater, snowmelt, penetrating inside the building according to the general conditions of the contract
Groundwater and sewage back-up
Oil or fuel oil from heating installations and cisterns
Frost
Pipe clearing and restoration
The basic premium is related to the value of the property. It is strongly recommended that you are neither under- nor over-insured: the owner would be penalized in both cases in the event of a claim. The guarantee also applies outside the building if the pipes are buried.

Glass breakage insurance

It is possible to insure in different ways:
A global insurance
An insurance per room
A glazing insurance for common premises, the glazing of rented premises being the responsibility of the tenant
How to insure?
It is the building's fire insurance sum that serves as the basis for setting the premium. In insurance per room, it's the surface area of each pane of glass.

Rental income insurance

This is a loss of income following an insured and covered loss. This loss of income is automatically insured as follows:

By fire insurance up to 5% of the allocated property indemnity (paid for property damage), known as top-up or additional costs.
By building insurance, loss of rental income cover for a maximum of 24 months.

2. Liability insurance (RC)

Liability insurance (RC) covers damage to other people's property. It also extends to property. Liability insurance fulfils three important tasks:
Compensating injured third parties for all bodily injury and property damage when the insured's liability has been established
Defending the insured against unjustified claims, and paying expert, legal or court costs if necessary
Representing the insured in talks, discussions and investigations resulting from a claim, and taking responsibility for any recourse.
In short, the purpose of liability insurance is not only to compensate the injured party, but also to assist the client.

Building liability insurance

The owner of a building is liable for damage caused by construction defects or lack of maintenance.
This means that the owner can be held liable even in the absence of any wrongful conduct on his part. The injured party must still provide proof of the defect.
Building liability is not always necessary; private liability may suffice.
For further information, the ASSURIMO insurance brokerage service is at your disposal free of charge and without obligation
www.assurimo.ch

Who better than a broker to know at what price your property can be sold? Who better than him to advise you to wait or sell quickly depending on local and national news? A real estate broker will be able to appraise your property in order to offer it under the best possible conditions.

A salesman at heart, an intermediary between seller and buyer, the real estate broker also takes care of advertising, visits, checking the condition of the property and estimating any work required. He also puts together the sales file (title deeds, exact description of the property, co-ownership regulations, etc.).

You don't choose lightly the person to whom you will entrust the sale of your home, which constitutes the entire major part of your estate.
Here's a questionnaire that may help you in your choice:

• Does he have a good reputation?
• Is his contract legal, clear and fair? Does he give you time to study it?
• Is his commission payable after the sale?
• Does he value your property realistically and not exaggerate in order to get the mandate first and then get you to lower the price later, after wasting precious time?
• Can he give you serious advice on the formalities to be completed?
• Does he offer special insurance and guarantees?
• Does it have a large file of potential buyers to make a sale quickly?
• Does it help you showcase your property, letting you know where a buyer's attention is focused?
• Does he or she produce a photo report, a dossier, a brochure presenting your property?
• Does he or she work with other agencies who will receive the photos and description of your property.
• Does he assume all advertising costs?
• Will he carry out an advertising plan in newspapers and other media?
• Will the photo and description of your property be published on the Internet? On which sites?
• Does it have well-located shop windows to display the photo of your property?
• Are its posters and billboards clearly visible and legible?
• Is it able to organize "open days" or other original marketing activities if necessary to attract as many prospects as possible?

If he puts all (or most) of the above in writing and undertakes to keep you regularly informed of his contacts and approaches, he's probably someone you can rely on to sell your property quickly and well. And save you a lot of hassle.

A professional appraisal gives you the certainty that an object is being offered at the right price.

An appraiser objectively measures the market and/or rental value of a property, whether it's a dwelling, commercial space, land, agricultural property, goodwill, ...

The number of elements involved is enormous. Through his experience and knowledge of laws, regulations and the market the expert makes an accurate diagnosis, enabling the correct assessment of an object's value.

His expertise covers knowledge:

• Technical: architecture, quality, condition, maintenance
• Economic : market, economic and political context, ...
• Legal: private and public
• Fiscal: tax regulations

In the following areas, expertise is recommended:

Wealth management by private individuals

• Buying, selling, exchange of real estate
• Sharing of estates, gift-sharing
• Exit from community, d'indivision
• Attribution préférentielle prévue par la loi
• Tax returns
• Declaration of inheritance
• Declaration for solidarity tax on wealth

• In the commercial lease environment

   

• Fixing renewal rent
• Fixing the eviction indemnity

• In the social life of the company

   

• Mergers, contributions, disposals, purchases
• Balance sheet preparation
• Special obligations of insurance companies

• Expertise for loan

   

• Appraisal of bank guarantees
• Determination of starting price, auction support in the event of a sale
   

The sale of the property

The choice of notary is up to the buyer, a choice no longer dictated by the property's geographical location.
During a sale, the notary can provide information on the following points:

• The property itself: location, zone plan, building regulations, amenities, taxes, building condition, expertise, neighborhood, aesthetics, etc
• Financing: equity shares, bank financing, potential federal aid.
• The consequences: estate and matrimonial implications of a real estate acquisition.
  
  The notary takes care of all the steps and requests for authorization required to draw up the deed of sale:

Terms of the contract: purchase by one or several, agreed price, term, guarantees, special conditions
Administrative steps and preliminary operations: examination of the Land Register, verification that financing has been obtained, request for authorization

The notary ensures the proper execution of the contract by:

• Releasing the funds when all conditions are met
• Filing the transfer requisition with the Land Registry
• Registering the new owner
• Remitting the guarantees to the creditor
  
  The notary's fees are based on a tariff set by the Cantonal Council of State.

Once all the conditions for the sale have been met (loans, authorizations, documents, rights...), the deed of sale can be signed before a notary by the buyer and seller.

The choice of notary is up to the buyer and is not limited to the location of the property.

Before signing this final deed, the buyer may ask to visit the property again to check that nothing has changed since the previous visit.

At the signing of the deed of sale, the buyer pays the remainder of the sum as well as the "notary fees" (fees of the notary or notaries, registration fees, provision for miscellaneous costs of publication and conservation of mortgages). The deed confirms the transfer of ownership and payment of the price to the seller.

In the case of a co-owned property or a house forming part of a subdivision, the signing of the deed is accompanied by the seller handing over his copy of the co-ownership regulations or subdivision specifications.

The notary who drew up the deed keeps an original copy - the minute. The keys and a certificate of transfer of ownership are given to the buyer. A copy of this deed, which constitutes the title deed, will be sent to him after formalities, together with a statement of costs and reimbursement of the balance of the deposit paid.

The deed must be kept in a safe place.

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Accommodation: according to the terms of the lease, failing which the legal provisions shall prevail.
Commercial space: according to the terms of the lease failing which the legal provisions shall prevail.

While the lessor is under no legal obligation to accept it, a written request can be addressed to the régie, which will determine.

Ordinary termination: notice period and contractual deadline must be respected. No reason required. Termination must be signed by all leaseholders. It is advisable to send it by registered mail.

Aside from the recommendations that are indicated by the régie, the object must be returned in a perfect state of cleanliness, free of all objects and occupants. Any damage caused must be reported as soon as possible to the management.