When buying a property locally, one of the first things to arrange is your financing. This article provides you with the essentials when taking out a mortgage.
Thanks to Harriet Kibbe, our resident writer providing us with the ins and outs of the complex Nyon Real Estate scene!
It’s essential to have a clear picture of your financing when property hunting. This is important because when a well-priced property becomes available one must be able to move very quickly in putting in an offer and a deposit.
To make sure I got all the right information I spoke to Jean-Marc Vaucher who works at Banque Valiant in Nyon about how mortgages work here and what every buyer needs to know:
1. You need 25% cash of the value of the property.
This is the so-called: ‘fonds propres’, It can be made up of 10% cash, 10% can be withdrawn from a pension fund (3ème pilier or other) or even just used as a warranty but kept in your pension fund, and finally 5%, approximately, which is forecast to cover notary fees (calculate these fees here) and stamp duty.
2. Mortgages depend on the buyer’s gross annual income.
This includes past bonuses, as well as any debt/revenue from abroad and the payment or receipt of pensions. You will have to provide tax returns of course, or, if you’ve just landed, you will be asked to sign a declaration that your assets and liability statement is true, on your honour.
3. The bank’s desktop valuation of the property often differs from the asking price.
Sometimes to get the house you want, therefore, you will have to put in the difference yourself.
4. Fixed-rate mortgages can be taken out over 5, 10 and, rarely, 15 years.
Beware of potentially hefty early repayment fees depending on when you sell since banks will charge you all the outstanding interest payments.
5. Interestingly, it’s possible to split up one’s mortgage into sections, or ‘tranches’.
You can have different amounts on different loan terms, some at fixed rates others at the Saron rate. Check out the options in more detail on the Comparis site here. This may be useful in forward planning, and depending on your circumstances you could arrange a tetris of mortgages to your advantage: to be discussed with a professional for sure!
Mortgages are a complex issue and too much to cover in this overview, but consider this an introductory crash course to the topic!
Harriet has lived in the Geneva-Nyon area on and off since 1988, growing up as part of the transient international community, and has settled in Founex with her family and four children since 2011. Having moved several times she has always offered her help to newcomers and people from the international community in general to assist in their integration and understanding of the region. Access Harriet’s previous Living in Nyon articles here.
If you want to contact Harriet you can reach her by email here.