Recent studies of Swiss property warn of a property bubble especially in the major cities and some exclusive ski resorts. The financial authorities have asked lenders to be more cautious and to ensure down payments are sufficient and stricter affordability guidelines are satisfied. We strongly believe that if a buyer is cautious and takes expert advice, then Swiss property remains a good long-term investment.
If interest rates remain low and the economy stable then the demand will continue to push prices higher. The Swiss National Bank and the Financial Markets Supervisory Authority (Finma) have therefore asked the banks and lenders to ensure that ten per cent of a borrower's down payment is financed using personal sources and not from their pension fund capital and that one-third of the loan should be repaid within 20 years. These are guidelines and the lenders can, and do, make exceptions. However, if this self-regulatory system is abused, then the government will no doubt increase the pressure on lenders.
Here are some guidelines to follow when buying a property in Switzerland:
* Generally--When you buy a property also consider other factors including the proximity of schools, public transport, motorways, airports, shopping, and leisure amenities. Carry out your own research, for example, does the area have a good reputation in the local community and will the property adjacent to your land be developed in the foreseeable future. Check the rights and duties relating to your property and whether the land is leasehold or freehold. Even if some of these points do not seem relevant now, it could be important when you sell the property in the future.
* Initial meeting with a lender--Decide on the type and location of the property you would like. Before you go property hunting, check how much a lender will finance, based upon your income and down payment. This will avoid disappointment when you find your dream home, which perhaps isn't financially viable.
* Property search--The local papers and the Internet are two of the best ways to find property. We recommend the following websites: www.homegate.ch, or www.newhome.ch and www.comparis.ch/immobilien, as three of the best.
* Budgeting--Buying at the right price is a major factor for financial success, but other decisions also affect your costs and profit such as the type of mortgage. When budgeting, remember the ancillary costs including notary and local authority charges, insurance, bank...