An affordability calculation shows you whether you can afford your dream home over the long term too. Here you will find everything you need to know about affordability.
The role of affordability when purchasing residential property
An affordability calculation indicates whether you can afford your desired property over the long term too. To calculate affordability in each individual case, the running costs of the property are compared to your income.
As a rule of thumb: a property is considered affordable if the monthly costs do not exceed a third of your gross income. Mortgage providers therefore see your income as an important criterion in determining whether or not you can be granted the mortgage you want.
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How is affordability calculated?
The monthly costs incurred in the affordability calculation comprise the imputed interest, the amortisation costs and the ancillary costs for your property.
Imputed interest rate
Mortgage institutions use the “imputed rate of interest” for the affordability calculation. At 5%, it is much higher than the current rates, so the costs for the mortgage are noticeably higher when calculating affordability than in the actual mortgage offer. In this way, the financial institutions ensure that the financing remains affordable even when interest rates rise.
Amortisation
The costs for repayment (amortisation) of the second mortgage are also factored into the affordability.
Ancillary costs
Ancillary costs are the maintenance costs for the property. These include insurance premiums as well as heating and electricity costs.
We help you to finance your dream home
- We take a comprehensive look at your personal situation and tailor the financing concept for you.
- On the SwissFEX mortgage platform, we show you a wide range of offers from different providers. In this way, you can transparently compare several suitable offers in real time together with your advisor.
- We will work out a tax-optimised amortisation model for you.
- We ensure that you can continue to finance your home in the event of a misfortune with financial consequences, and thus continue to lead a self-determined life.
- In contrast to regulatory guidelines which calculate the imputed rate of interest, we show you the actual monthly costs for your home.
