Buying your own home: make sure you answer these questions
There are many important questions to answer when buying your own home:
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Created on 26.12.2023
Buying a house: tips and checklists for a successful investment
Are you thinking of buying a house? Find out which important questions you should answer beforehand. If you want a return on investment instead of a property to live in, for example, you would be better off investing in an apartment. What else do you need to consider? Read on to find out more.
Buying a house vs buying an apartment – the differences at a glance
| Term | Single-family home | Owner-occupied apartment |
|---|---|---|
| Term Purchase price |
Single-family home Fairly high |
Owner-occupied apartment Usually lower; various factors play a role |
| Term Maintenance costs |
Single-family home High |
Owner-occupied apartment Various factors affect the maintenance costs |
| Term Suitable as an investment property? |
Single-family home Generally no |
Owner-occupied apartment Generally yes |
| Term Suitable as retirement provision? |
Single-family home Generally yes |
Owner-occupied apartment Generally yes |
Question 1: Do you want to commit yourself and your money?
This question has nothing to do with whether or not you’re planning to get married soon – you can of course buy your own home if you’re single or in an unmarried partnership. The question is actually abut whether you want to become “attached” to a place and settle down there. Or would you prefer to focus on other things first and be able to pack your bags and leave whenever you want, be it for a new job, a move abroad or to travel?
You can also think about whether you want to invest your available capital in shares, funds or other capital market investments for a few years first.
Question 2: What are the important criteria for a property?
If you decide to buy, you need to find a suitable property. Think carefully about how your ideal home should look. This can give you some ideas of what to look for when searching. You can always make compromises later if necessary.
Criteria for your search could be:
- Budget: how much money do you have available?
- Location: where would you most like to live?
- Size: how many rooms/bedrooms do you need?
- Equipment and furnishings: what do you need and what can you do without (e.g. modern kitchen/bathroom, accessibility)?
- Garden: e.g. do you want a bigger garden or would you prefer something that’s easier to look after?
- Other features: are additional features such as balconies, large terraces, a big garage, guest rooms, etc. particularly important to you?
Question 3: What should you be aware of when buying a house?
When you find a potential property, check it thoroughly:
- Price: how much can or do you want to pay? (see also question 4)
- What maintenance costs will you have to cover? (see also question 5)
- The property’s condition:
When was the property last refurbished and renovated?
Are there any serious defects or damages?
How high are the costs for any possible refurbishment and renovation work now and in the future?
Make sure you answer these questions at the latest when you go to view the property and ask the seller to provide the following sales documents:
- Extract from the land register
- Land register plan and zone plan
- Construction plans and detailed building specifications
- Documents regarding building insurance value
- Cantonal energy certificate for buildings (if available)
- If buying a condominium: act of foundation, site rules, value ration calculations, information on renovation funds, etc.
Question 4: Do you have enough capital to buy your own home?
You must raise at least 20 percent of the property’s purchase price yourself. At least 10 percent of the purchase price must be “real” capital, meaning it must come from somewhere other than the 2nd pillar (anticipated withdrawal and pledging of pension funds). You can cover the remaining amount with a mortgage.
Property financing
Can you afford your dream home?
Use our mortgage calculator and check if you have enough capital for your chosen property.
Question 5: Is the property affordable for you?
Just as important as capital is the question of affordability. This determines whether or not you can afford your property in the long term.
The following rule of thumb applies: the costs for your property should not exceed one third of your gross income. Property costs consist of interest, mandatory amortizations and the property’s running costs (maintenance, repairs, etc).
When deciding whether a property is affordable for you in the long term, lenders don’t use effective interest, but rather the higher imputed rate of interest, currently at around 5 percent. This way, they ensure that customers will be able to afford the property even if interest rates go up.
Therefore, the affordability calculation is:
5 percent of the mortgage + mandatory amortizations + 1 percent of the property’s purchase price (running costs) ≤ one third of gross income
Question 6: Document checklist – what documents do I need for a mortgage?
We have created a checklist to help you find out which documents you need in order to take out a mortgage.
Buying a house: get attractive finance offers from PostFinance
With PostFinance, you will find the right type of financing for your home. Compare our mortgages yourself online or get advice.
Questions and answers
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The alternative to buying a house is, of course, to build one. The benefit is clear: you can make your home exactly how you want it to be.
It’s difficult to say which option is better financially; costs depend on many factors such as land prices, available facilities and location.
What is clear, though, is that the method of financing changes: an already existing house is financed with a mortgage, whereas a new build is paid for with a construction loan. This is often transformed into a mortgage once the building is completed.
As a result, you may face a double financial burden during construction: the rent for your current apartment and the loan for the construction.
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When buying a property, seek advice from an expert and check all processes and documents thoroughly.
This way, you will avoid any nasty surprises.
- Have a building expert or architect check the structural condition.
- Read the contract of sale carefully and have the agreements checked by a lawyer.
- If possible, arrange a guarantee for legal and property defects.
Useful information: if the seller hides known defects from you, they are always liable.
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There are various notarial and administrative fees when buying a house. These vary from canton to canton and are usually shared between buyer and seller:
- Property transfer tax: this is charged by most, but not all, cantons. Zurich, for example, doesn’t charge property transfer tax. The type and amount of tax can vary greatly from one canton to another. In Neuchâtel, tax is highest at 3.3 percent of the market value, whereas in Zug, the tax is based on the authority’s workload. In some cantons, local municipalities are responsible for levying property transfer tax.
- Notary fees: you must ask a notary to notarize the contract of sale and record the new ownership and the lending bank’s mortgage lien in the land register. The market value is usually used to calculate the fee (e.g. 0.1 percent).
- Land register office administration costs: the land register office charges fees for entries into the land register (changes of ownership and mortgage liens). In Zurich, for example, these costs amount to 0.1 percent of the market value.
