Purchasing a home and joint mortgages. Everything you need to know about real estate purchases as a married couple.
The topic of purchasing a home is very important for many married couples. What should be considered when taking on a mortgage? What are the differences with respect to cohabitation? We explain what married couples should take into account when buying real estate.
Affordability calculation for real estate purchases. What is different for married couples and cohabiting partners?
The financing base is always key when granting a mortgage. In this context, mortgage lenders generally do not distinguish between married and unmarried borrowers.
However, there are exceptions. If the couple is newly married, particular attention is paid to the affordability assessment. The reason for this, among other things, is the assumption that one of the partners may receive a lower or no salary in the near future due to family planning. This could lead to the granting of a lower mortgage framework.
If a married couple is about to retire, affordability can also be compromised. This is because spouses, as per the AHV law, jointly receive at most of 150 percent of the maximum single person's pension. Additionally, pension income is usually lower than gainful employment income. All in all, taking on a mortgage should be planned carefully in this case.
Furthermore, what is referred to as the "marriage penalty" can negatively affect the affordability calculation. In many cases, two gainfully employed persons have a higher tax burden overall after getting married than when they cohabited together previously as single persons. The reason for this effect is the progressive taxation system in Switzerland. The resulting financial disadvantage for married couples can, under certain circumstances, have a negative impact on the fulfillment of affordability.
Married couples are jointly liable for the mortgage
As a rule, married couples are required to jointly sign the mortgage contract. Therefore, both spouses are liable with their assets and income for the mortgage interest and any amortization costs. However, it is already customary for the property to be financed by both partners. This is in part due to the currently high real estate prices.
What happens to the mortgage in the event of a separation?
In the event of a separation, there are several options for continuing the mortgage.
- Real estate sale or termination of the mortgage: The mortgage can be terminated before the end of the contractual term. In this case, the bank is entitled to compensation, which is referred to as the early repayment penalty. Depending on the remaining term, this compensation can amount to tens of thousands of Swiss francs.
- Remaining in the status quo: The mortgage remains in its original form, even though only one of the parties lives in the property.
- Takeover of the mortgage by one of the partners: If one of the partners can afford the mortgage alone, they can buy out the other partner and become the sole owner of the property. However, this is only possible if the bank's new credit decision is positive.
- Transfer of the mortgage to a new property: The original property can be sold and a new property can then be acquired. The financing solution for the first property can be transferred to the second property.
Select joint mortgages carefully
You have to carry out extensive research to find the right mortgage. Because it's usually a long-term commitment. It is therefore a good idea to look at various combinations of interest-rate developments and mortgage models with all the pros and cons. That way, you can find out what's most important to you in a mortgage. Credit Suisse experts are always available to provide you with independent, individual advice and planning assistance.