Are you a renter who has always dreamed of owning your own property? Our property experts know when it makes sense to buy instead of rent, and understand the pros and cons of buying a property.
Home ownership has increased in Switzerland in recent years, with demand rising especially sharply since the start of the pandemic. Mortgage interest rates have been very low for years, so many want to seize the opportunity to take on a long-term mortgage at a record-low rate. The strong demand has, however, led to a rise in property prices, and popular locations are enjoying a real property boom.
Demand is still very strong in spite of the high purchase prices. So, what exactly are the benefits of owning your own home instead of renting? And is it really a much cheaper option?
If you want to buy a property, you’ll need at least 20% of the purchase price in the bank. If you’re seeking financing from a bank, they will also do an affordability calculation – based on an interest rate of 5%. These hypothetical costs should never exceed one-third of your gross income. This means that, if you meet the requirements for a mortgage, your housing costs will be lower than if you rent, because mortgage rates are still very low.
If you live in your own property, you have to pay tax on the notional income from the property – the rental value. When mortgage interest rates were higher, interest payments could be offset against the rental value. Now that interest rates have fallen, this is rarely possible and tax has to be paid on a higher taxable income. If you own an older property, renovation work undertaken to preserve the value of the property is tax deductible. Investments in eco-friendly improvements and energy-saving measures can also be deducted. If you own a new build, there is not usually much to renovate, so the tax advantages are very small.
Home ownership always offers greater security. You are not at risk of eviction and you are also making provision for your retirement. What’s more, you have much more freedom if you own your own home: you can completely redesign the interior, even in condominiums; you can move walls, change the floors or even replace the entire kitchen.
The bottom line is that owning your own home has more benefits in the long run. You enjoy lower housing costs and accumulate savings through your repayments and therefore the property. At the same time, you are preparing for your retirement and further reducing your housing costs.
But how do you find your dream home if demand is constantly rising? At Engel & Völkers, we keep lists of prospective buyers and give you regular updates on properties before they have even been advertised. This gives you a head start and the opportunity to act quickly.
If you already live in your own property but are looking for something new, we can also help you to sell your property or rent it out. Contact us online, by phone or in person at your local Engel & Völkers shop.
We’d love to help you find your dream home!
