Important tips for buying a home: how to avoid common mistakes

36% of Swiss people own their own home and have fulfilled their dream of self-determined living (source: Federal Office for Housing, FOH). Would you like to join them soon? We’ll show you what you should take into account when buying a house or apartment. 

How much money do you need to buy a house?

When buying a property, you generally need to contribute 20% equity. 80% of the purchase price can be financed via a mortgage. For example, if you want to buy a property worth CHF 1 million, you need around CHF 200 000 in equity.

It is important that at least 10% of the equity amount must be in the form of “hard equity”, meaning it does not come from your 2nd pillar. “Hard” equity includes account balances, pillar 3a assets, advancements of inheritances and gifts. Any further shortfall may be supplemented using your pension fund. For detailed information we recommend the article The dream of home ownership: how to raise equity.

Your income also plays a role. Depending on the purchase price and financing, you need a certain minimum income to ensure you can afford the property. The affordability requirement ensures that you can use your income to cover the annual interest costs for the mortgage(s), the amortisation instalments for your second mortgage and the expected maintenance costs for your property.

With our affordability calculator you can calculate whether you can afford the property over the long term and at what level your pain threshold is.

Tip: clarify the situation as regards financing early with an expert. Your potential budget is key to the search.

Where can I find the right property?

To find your ideal property, you should regularly search online real estate portals. Be sure to narrow down your search to get the most relevant results. But don’t be too restrictive with the filters, or you may miss out on an interesting opportunity. It’s worth setting up a search subscription that regularly compiles the latest adverts for you. 

In addition to online portals, you can also contact real estate companies and property management companies directly and let them know you are interested in buying a home. It can also be worthwhile using your private network of contacts. Inform your friends and family that you are looking to buy a house or apartment. With a bit of luck, you’ll be the first person to learn about a property for sale. 

How can I narrow my property search? 

Determine as early as possible which type of property is for you and your life. You can define various criteria, such as:

• Price
• Region
• City/town, country or conurbation
• Minimum/maximum number of rooms
• Minimum/maximum number of square metres
• Availability of parking
• Homes with or without a garden/terrace/balcony
• Surroundings: proximity to shops, public transport links, educational facilities for children

The criteria can be extended as necessary. However, you should not limit yourself too much. Remaining expansive in your search criteria or prioritising your criteria will enable you to compare the options better. Think about where you are willing to compromise. Finding your absolute dream property is no easy task. 

Where can I find the right mortgage?

You can obtain a mortgage from banks, insurance companies or pension funds. You can choose from various mortgage models, namely variable , SARON and fixed-rate mortgages. There are also green mortgages, where energy-sustainable properties can benefit from particularly favourable interest rates. It is important for the mortgage to suit you and your financial situation. 

What do I have to take into account when viewing a property?

As a rule, a viewing takes about 30 minutes. Be sure to view properties in daylight to get a better impression. It makes sense to draw up a checklist in advance so that you do not forget or overlook important details. Various points can be included on this list, for example what is the structural condition, have the floors been laid properly, is the exterior façade maintained, are the rooms well insulated? Personal requirements should also be taken into account, for example the view out of the windows or the proximity to buildings opposite.

Visit every room of the property, including the basement, attic and garage. In addition to these factors, you should also find out about the surroundings and the neighbourhood. You should establish why the owner wants to sell. 

It is advisable to return to the property at a different time of day and have a look at the surroundings. This allows you to see how the noise levels and lighting conditions are and whether they are right for you.

What do I do if I want to buy the property I have viewed?

Each sales process is individual. Ask the seller which documents you need. As a rule, you will receive a list of all the documents required. 

There is a bidding process. What do I need to consider?

A bidding process is the sale of a property in which the seller does not define a fixed purchase price, but instead asks interested buyers to submit a purchase offer. Often a minimum amount is specified. 

In a bidding process, it is important to know your maximum price. Define in advance exactly what you can afford. You should also clarify what the maximum estimated value of the property is. 

In some bidding processes, the seller is interested not only in the price, but also in “soft skills”. These include, for example, family members, community affiliation or how well they like the buyer. A personal conversation or an accompanying letter can have a positive impact in such cases.

How does the actual purchase work? 

After the buyer has agreed, you usually first sign a reservation contract. The reservation contract secures the buyer’s right to purchase the house and is usually accompanied by a deposit confirming the intention to buy.

The official purchase contract is then drawn up by a notary. Both the buyer and the seller send all the important information to the notary’s office in advance. The contract is drafted on the basis of these documents and sent to the two parties for review approximately two weeks before the scheduled notary appointment. On the day of the sale, the two parties meet at the notary for official certification. This is where the contract is signed.

Payment is made once the contract has been signed. As a property is usually financed via a mortgage, the buyer’s bank issues an “irrevocable undertaking to pay”, which guarantees that payment will be made after the transfer of ownership has been entered in the land register. At the same time, the bank obtains a mortgage note from the seller, which is used to secure the mortgage.

As soon as the payment is confirmed, the transfer of ownership is entered in the land register, at which point the buyer becomes the official owner of the property.

What other costs need to be kept in mind in addition to the purchase price? 

When buying a house, it is important to note that other costs are due as well as the purchase price:

Real estate transfer tax 

The real estate transfer tax is due upon registration of entry in the land register and varies by canton. Ownership is not transferred until the real estate transfer tax has been paid. You can find out about costs online, for example on the website of the cantonal notary. 

Costs for a notary public and entry in the land register

Every property purchase must be notarised and entered in the land register. The costs for this vary depending on the canton and are calculated as a percentage of the purchase price. The entry in the land register is also a percentage of the purchase price. In Zurich, for example, the notary costs are 0.1%; entry in the land register costs 0.15%.  

Tip: arrange with the other party to the transaction how the costs for the notary and real estate transfer tax are to be split. Often they are split half and half, but other arrangements are also possible.

Mortgage note

In the case of mortgage loans, a mortgage note must be submitted to the land registry. There are fees for this; the calculation of the fees varies by canton. They are generally between 0.1% and 0.3% of the purchase price.

Pension withdrawals

Taxes are due on pillar 3a or pension fund withdrawals. Ask your financial advisor for an overview of the costs.

Insurance fees

As a house or apartment owner, you should insure your new property. Buildings insurance protects you against damage caused by broken glass, water or fire. Click here to find out more.