Best Online Mortgage in Switzerland

Which is the best online mortgage in Switzerland?

Hi there,

There is no "best" mortgage. Which mortgage is best suited to your needs depends on many factors, including the type of mortgage, mortgage amount and mortgage term you are looking for.

You can compare online mortgages using the unbiased mortgage comaprison on moneyland.ch. Simply select the "Online mortgage" filter to limit results to offers from online mortgage lenders.

Best regards from Moneyguru

Mortgages which you can apply for entirely online are a good option if you are looking for a basic mortgage. If you need something more complex (i.e. multiple tranches, forward mortgages, reverse mortgages, etc.) you aren't likely to find these options in the online applications. Maybe banks will offer more complex solutions online in the future, but at this point it's primarily basic FRMs and ARMs - in the best case with the option of indirect repayment using your 3a retirement assets. In my opinion the current Swiss online mortgage offers are best suited to small mortgages on a home you already own, or basic long-term FRMs.

Hi forum,

What is your experience with the Avantage Service online mortgage from the Geneva cantonal bank?

What are the pros and cons? What about terms and conditions, the service and customer satisfaction?

Can I get this mortgage in Basel or Zurich as well?

Thanks

Hi there,

The Avantage Service mortgage is included in the interactive mortgage comparison on moneyland.ch.

The mortgagee is the Banque Cantonale de Genève (BCGE). Avantage Service is the branding used for BCGE online services.

Avantage mortgages can be used to mortgage properties in all cantons in Switzerland except for Ticino.

The biggest advantage of this mortgage offer: The interest rates are low compared to those of other Swiss mortgages.

Best regards from Moneyguru

More on this topic:
Unbiased mortgage comparison

Hello Guru!

My boyfriend and I are planning to invest in a pre-construction project in Geneva CHF 1.68 mio. construction planned Sep 2020 to Dec 2021. 

Combined we have: 
- pillar 2: 75k that can be used towards property
- pillar 3: 30k 
- about 400k cash 
- one salary is 230k annual brut and the other 110k annual brut 

Interested to know your advice, (considering taxes and overall best financial decision) on what would be our best course of action for us on how to manage the down payment and using pillars 2 and 3 (pledge and/or withdraw).

The bank has a tentative offer of 20% down payment (cash or cash/LLP) and an amortization of 22,400k when the house is finished. We are clarifying with them what exactly they mean by the amortization. Also welcome your thoughts on that.

Thank you!
 

Hi Gva1,

The SwissBanking guidelines set the standards in this regard. This is a self-regulatory body of Swiss mortgage lenders which defines minimum mortgage standards for its members.

For property which is used as the owner’s own residence, the following guideline applies: a minimum of 10% of the property’s collateral value (this is typically the lower of the purchase price and market value) has to be covered by a down payment which does not include pillar 2 pension fund benefits. Banks generally require down payments higher than 10%, but the remainder can be made up of pillar 2 assets. Most Swiss mortgage lenders will only finance a maximum of 80% of a property’s collateral value, so your down payment typically has to be equal to at least 20% of the property’s value.

In your case this means that you need a minimum of 336'000 Swiss francs for your down payment (20%*1,680,000 = 336,000). Of that amount, a maximum of 168,000 francs can be pension fund benefits.

Depending on the bank, the requirements can also be stricter. The requirements and conditions for construction loans can also differ from those for regular mortgages.

With regards to amortization, the SwissBanking guidelines stipulate that mortgage debt must be reduced to 2/3 of the property’s value within 15 years. This also applies to property which you live in yourself. If you get a 1,344,000 francs mortgage (= 80%* 1,680,000), this is how you would calculate how much you need to amortize: 1'344'000 – 2/3*1'680'000 = 224'000.

That means you have to repay 224,000 francs of loan principal within a maximum of 15 years. Repayments must be made in identical installments.

With regards to Swiss income and wealth tax, the following applies: When you own the property you live in, the property’s imputed rental value (a figure which indicates your hypothetical rental savings) counts towards your taxable income. The interest which you pay on your mortgage can be deducted from your taxable income. There are also tax deductions for property administration and maintenance costs. If your imputed rent is higher than the combined mortgage interest and homeowner deductions, this results in a tax burden. There are numerous factors which determine whether or not this would be the case, so there is no one-stop answer to the tax question. What can be said is that because mortgage interest rates are currently so low, financing a property in Switzerland often results in higher income taxes.   

Another requirement set forth by banks is affordability. The purpose of affordability requirements is to ensure that you will be able to continue to afford your mortgage on an ongoing basis. The rule of thumb is: The total costs of owning the property should not exceed 1/3 of your income. You can use the moneyland.ch mortgage affordability calculator to estimate your eligibility based on your income and other factors.

Best regards from Moneyguru