Anyone following their dream of buying a house or apartment has two tasks ahead of them: firstly, to find the right property, and secondly, to arrange financing. Below we explain all the key steps on the path toward your dream property.
The first step is to clarify: “what can I afford?” There are two figures to take into account: the affordability and the loan-to-value ratio. The affordability indicates the ratio between the financing costs (mortgage interest, amortization, maintenance costs and incidental expenses etc.) and gross income. For the property to be considered affordable, the financing costs must not exceed one-third of gross income. Check your financial situation with the UBS key4 mortgages affordability calculator.
Click here for the affordability calculator
The next thing to do is to look into the loan-to-value ratio. For owner-occupied residential property, a maximum of 80% of the property value may be financed by a mortgage. The remaining 20% must be financed from equity. Equity includes savings and capital from occupational and private pension plans (2nd and 3rd pillar), plus any advance inheritance or gifts, where applicable. Remember that at least ten percent of the property must be financed with equity that does not come from your occupational pension plan.
A financing certificate is a non-binding assessment of the purchaser’s financial situation. It shows whether a mortgage provider accepts the principle of financing the desired property on the basis of income, assets and other financial factors. If you have a financing certificate ready for the viewing, you can show the broker and the seller that you are not only interested, but also solvent. The certificate can also help the buyer to find out which properties correspond to their financial situation. This allows them to target their search more effectively.
You can easily apply for a financing certificate online here
It may take some time to find a suitable property. There are no general rules about how long the search will take, as the duration depends on several factors: Is there a clearly defined profile of requirements? How difficult will it be to meet these requirements? Are multiple sources being consulted to find the right property?
It usually helps to make a list where you note down and prioritize your personal requirements. Are you looking for a house for a young, growing family? Or an accessible senior residence? What’s more important: a large garden, a short commute or being close to the rest of the family? Do you want a half-timbered house, a bungalow or an architect’s house? Would you prefer an urban environment or a rural area? This type of list ultimately represents a profile of requirements that you can use during discussions with a broker, for instance.
In addition to regional brokers, proven research sources include real estate portals on the Internet, advertisements in daily and weekly newspapers, and word of mouth. Information about upcoming forced sales can be found in the official cantonal gazette, the Swiss Official Gazette of Commerce (SOGC) and on the websites of the relevant bankruptcy or debt enforcement office.
Read about the five most important factors in real estate searches here
Once you have identified potentially interesting properties, the next step is to arrange viewing appointments. Under no circumstances should you go to these appointments unprepared. Note down important questions in advance so you don’t forget anything. Before the appointment, it’s best to ask the broker or seller to provide a comprehensive presentation with all the plans and relevant documents.
Tip: The appointment itself should take place in daylight, because aspects such as the condition of the roof and facade are difficult to assess at dusk or in the evening. If possible, you should visit the property several times at different times of day – because not only the lighting conditions will vary, but also other elements such as the noise level (e.g. due to commuter traffic).
Even before the actual viewing, you should establish whether the existing infrastructure fits your own life. You should also take a close look at the local area before the appointment. This will give you an idea of the surroundings and the location of the property in advance.
The most difficult part of a viewing is paying attention to several things at once: the atmosphere, room layout and equipment, as well as any damage or renovation requirements. And don’t forget the cellar and the attic. You should pay special attention to the condition of the heating and drinking water systems, windows, doors and facade. You should also obtain information on any renovation work that has already been carried out.
Asking about incidental expenses will help you to assess the energy condition of the house at an early stage: poor insulation of the roof or basement or an outdated heating system are factors that can lead to high renovation costs. It’s best to have an expert such as an appraiser accompany you to the viewing to assess the condition of the property.
If you decide to go ahead with the purchase, the question that quickly arises is: is the property worth the asking price? A professional real estate valuation will ensure clarity for all parties involved. A real estate valuation involves examining the house or apartment according to objective criteria in order to adequately determine the market value of the property.
An online real estate valuation is a good option for conveniently calculating the value of private single-family houses and apartments. This compares the desired property with thousands of others in the region and works out an average price. It takes into account criteria such as the macro-location (region, municipality, transport connections, etc.), and the micro-location (schools, type of street, orientation of the house, shopping facilities, etc.).
Click here for the property assessment
In addition to these hedonic methods usually used in online real estate valuations, there are other real estate valuation methods.
Learn more about the different methods of real estate valuation here
Have you found your dream property? With the mortgage calculator from UBS key4 mortgages, you can work out the right financing conditions – and immediately receive a free, non-binding offer. Once you’ve found the right mortgage, all the other steps on the way to financing the mortgage can be completed conveniently online here.
Click here for the mortgage calculator
It’s best to give the mortgage provider a comprehensive dossier about the property including the land register extract, plans, energy assessment and photos. This will allow them to determine the market value of the property for financing purposes. This valuation can also be very helpful for a future negotiation if there is a major difference between the bank’s estimate and the provider’s price. As well as providing documents concerning the desired property, you will also need to compile the applicant’s dossier and give details of your financial situation – excerpt from the debt enforcement office, leasing contracts and other documents.
Here you can obtain an overview of the documents to be submitted for the credit check.
Here you’ll find the right mortgage offer for you.
Good arguments are needed to negotiate the price. If the house has been for sale for a while, the conditions could be right for negotiation. Basically, however, price negotiations require tact and sensitivity. At the end of the day, the seller is often in a better position due to the state of the real estate market. In the worst case scenario, another interested party will have their offer accepted for your dream house.
The best arguments for reducing the price are linked to the market value of the property. If a real estate valuation determines a lower value than the sales price, there is reason enough to negotiate. Structural defects or the need for renovation or refurbishment can also be helpful in negotiating the price. The more accurate the description, the better: lead pipes that need to be replaced, an attic with no insulation, a damp basement, etc.
The bidding process is a special case when it comes to price negotiation. After viewing the property, the prospective buyers submit their bids in several bidding rounds, like in a standard auction.
You can find more information about the bidding process in this article
Before the actual purchase of the house, the seller and the buyer often conclude a reservation contract. This can be kept very concise. It specifies the designation of the property, the agreed purchase price, the division of land register costs, the date of transfer and the amount of any down payment – including a provision in case the buyer or seller withdraws from the contract. The definitive purchase contract is drawn up on the basis of this reservation contract. The purchase contract for the property must always be notarized. The seller or the broker passes on all the relevant information about the property and personal arrangements to the notary. The latter then prepares a draft purchase contract referred to as the preliminary contract. Both parties receive a copy of this to check through.
The parties usually have about two weeks to review the purchase contract. It’s advisable to have the contract examined by a lawyer during this time. Once no more changes are requested by either party, the next step is to sign the contract with the notary.
(All) sellers, buyers (or their authorized representatives) and the notary are always present at the authentication appointment. Everyone present receives a reading copy of the contract, which the notary subsequently reads aloud. This is the time to ask any final questions and make any necessary additions. Finally, the purchase contract is signed by both contracting parties and the notary. This seals the purchase, and the buyer is obliged to pay the purchase price.
Legally speaking, the transfer of ownership and the authentication of the purchase contract are two different processes. Depending on the procedures in force in the notary’s offices and land registers in the particular canton, the property may change hands immediately after authentication by the notary. However, there may also be a considerable delay between the authentication of the purchase contract and the actual transfer of ownership.
After the transfer of ownership, the buyer receives a written request from the notary to pay the purchase price. This results in the mortgage provider paying out the mortgage.
For the mortgage provider to pay out the mortgage, several conditions must be met:
In addition, the mortgage provider must be registered as the creditor in the land register entry for the new property. Once the seller has confirmed receipt of payment, the notary arranges for the land register to be amended. The purchase process is now complete.
The final act is the appointment for the handover of the property. This also includes the handover of the keys. Any payments already made, e.g. for heating oil, building insurance or taxes to the public authorities, must be settled on the handover date. Building insurance is the keyword here: it’s not only worth planning the move early on, it’s also important to check the insurance coverage for your new home.
You will find an overview of the insurance you need after buying a house here
