dreams of home ownership how to finance home ownership successfully

How to Make the Dream of Home Ownership Come True

Anyone wishing to buy an apartment or house needs to meet the equity and affordability criteria. Credit Suisse is at your side with a network of regionally anchored mortgage experts to review the feasibility and individual financing for you.

Requirement No. 1: At Least 20% Equity Capital

If you wish to purchase your dream home, you will need to put down at least 20% of the purchase price or market value yourself. The bank will finance the remaining 80% as long as you meet the following conditions: At least 10% must come from liquid assets. These can include savings or money you gain access to through the liquidation of fixed assets. You can also make use of savings from tied pension provision. The remaining 10% of the required equity can also come from assets contained in your employee benefits insurance. If you meet these conditions, you can obtain the remaining sum amounting to a maximum of 80% of the required capital in the form of a mortgage. Let our experienced specialists advise you on the individual financing of your home. Here is a financing example:

Financing Amount (in CHF) Remarks
Purchase price or market value of your property 800,000 100%
Equity capital 160,000 You have to put down a deposit of 20%
First mortgage 528,000 66%
Second mortgage 112,000 14%
Result   Credit Suisse will assume 80% also meet the affordability calculation

Requirement No. 2: Long-term Affordability

For your house or apartment to be financed by a bank, it is also necessary to check whether you will also be able to afford the property in the future. Specifically, the future living costs (imputed mortgage interest, repayment and ancillary costs) may not amount to more than a third of your gross income. This is necessary in order to ensure that you will also be able to fund your mortgage in the event of rising interest rates in the future. The calculatory example based on the financing shown above illustrates the details:

Affordability Amount (in CHF) Remarks
Living costs    
Annual mortgage interest costs (at 5%) 32,000
Calculating at 5% ensures that you would also be able to meet the financing requirements for your property in the long term in the event of a higher interest rate.
Annual repayment (calculated over 15 years)1 7,467 Depending on the type of repayment (direct or indirect), there are also different tax benefits. For example water, heating costs, insurance costs, property maintenance and minor repair work.
Annual maintenance and ancillary costs (calculated at 1% of market value) 8,000 For example water, heating costs, insurance costs, property maintenance and minor repair work.
Annual living costs 47,467  
Monthly living costs 3,956  
Income example    
Monthly income (gross) 12,500  
Monthly mortgage charge 31.7% Rule of thumb: Affordability is guaranteed up to a maximum of 33% of monthly gross income.

1. Mortgage repayment is made in whole or in part in equal, typically annual, amounts. There is a repayment obligation for the second mortgage. It must normally be repaid within 15 years but no later than reaching the age of 65.