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All You Need to Know About Buying Property In Switzerland

Oscar Jack

Be it the rich scenery of Switzerland’s snow-laden alps or the market flourishing with Fondue and hot chocolate; it is evident that it is a dream for many to call Switzerland their home. It is not that difficult to buy property online in Switzerland in today’s contemporary world, given that an individual has accurate and adequate information.

The Swiss housing market may be confusing for foreigners coming to Switzerland. House prices differ significantly from one place to the next, and Swiss financing and the laws governing foreign ownership may be puzzling. This article will help you understand everything you need to know about Buying Property In Switzerland.

What Are The Basic Rules?

The Lex Koller legislation is the all-encompassing collection of laws deciding where non-Swiss residents can own property and necessary licenses. Non-Swiss residents can buy property in elected ‘Holiday Zones,’ mainly in Montreux, Lake Lugano, and ski resorts. The maximum size allowable in these regions is 200 square meters of authorised living space per identified individual, excluding basements and balconies. A public lawyer can negotiate the advantages stated above.

Some communes and cantons have additional rules governing taxation, ownership and the number of properties owned as second homes in a given region.

Equity


The importance of equity is immense. You must invest at least 20% of the purchase price in becoming the owner of your primary Swiss house (also called “personal contribution” in other countries). Even if your salary allows it, you will be incapable of buying a house or an apartment without it, and this is a rule that all cantons and banks follow.

You’ll need to account for the purchase deed, schedule costs, and 20% equity (for example, “notary fees” in France). The notary’s and canton’s fees are different. The bank or your second pillar will be unable to cover your notary fees. Buyers are required to pay in cash.

These expenses would be around CHF 56,000 for a house in Geneva with CHF 1,000,000.

Borrowing Capacity


You should also evaluate your borrowing ability in addition to your equity. The plan is to figure out the most substantial amount you may borrow so that your income can meet the mortgage in the future. This phase will also help you slim your search by focusing on houses within your

price range.

Arranging mortgages


You must first register for a mortgage with a bank before proposing. Mortgages can be established directly with lenders or by a mortgage broker who negotiates between the seller and the lender.

When you register, the lender assesses the worth of the property you want to purchase and decides whether or not to lend you money.

A minimum deposit of 20% with at least 10% in cash is usually required. The bank will lend up to 80% of the buying price. It divides into two halves, which we refer to as rankings. A share of the first-rank mortgage loan in Switzerland is non-depreciable, which means you only have to pay interest.  In most countries, you pay back the entire loan over time. You are in debt to your bank if you have not repaid the principal amount of the loan. It may seem different from what you’re acquainted with, but you can save money on your taxes because the interest is deductible. The residual (second rank) is depreciable, and you must repay both the principal and the interest.

The Process Of Completing The Purchase


The seller can endorse a notary, or you may choose one yourself. Notaries are public officers who work for both the seller and the buyer in different Swiss cantons. In Switzerland, a notary manages the contracts.

Generally, the notary will draft the contract and retain the buyer’s funds in escrow. They’d be able to advise on a transaction’s legality and authenticity. After implementing the official property transfer, apply for the change of ownership, and ensure that all legal requirements get fulfilled.

What are the Insurance and Utilities?


If you buy property in Switzerland, you will require building insurance, which usually covers natural catastrophes like fire and flooding, with extra coverage available.

Switzerland’s two optional home insurance are contents insurance for personal belongings and third-party liability insurance for visitors to your home.

You’ll need to arrange energy, water, internet, television, and insurance coverage suppliers. However, when it comes to most of these items, the Swiss market is exceptionally private and secluded, so you’ll have to shop around to discover the best deals.

Conclusion


We hope to have given you comprehensive knowledge about buying property in Switzerland and enabled you to make the best decision possible. We highly recommend thoroughly researching all the necessary terms and conditions to avoid future regrets.


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