Buying or renting: what is more convenient?

buying a house

We are tenants who dream of their own home. If, from a purely financial perspective, in recent years the answer to the question “buy or rent a property” was unambiguous, today things are a bit more complicated. However, if you think carefully and choose the most convenient financing solution, you can still save on housing costs by purchasing a primary home. However, the dream of your own four walls goes far beyond cost issues. Those who buy a home do so because they want to feel it more like home

The low mortgage interest rates that have characterized the last decade have meant that the costs of owning home were much lower than those of a rented apartment. Regardless of the type of financing, those who have been able to move into their own home instead of a rented apartment have automatically saved. Due to the increase in rates, however, from the end of 2021 what seemed to be a saving rule for owners, began to falter. As a result of inflationary fears, long-term rates have risen relatively significantly, so much so that, in the case of long-term fixed mortgages, it is now necessary to carefully calculate whether home purchase still agrees in purely financial terms.

buying a house

How much does it cost me to purchase a property?

At least 20% equity capital is required for the purchase

If you want to buy a house or an apartment, you need to have your own funds: banks require at least 20% of the purchase price. Example: A property worth CHF 800,000 requires CHF 160,000 of equity capital. In order for a mortgage with a maximum amount of 80% (in this case CHF 640,000) to be sustainable, the total housing costs, including mortgage interest, amortization and ancillary costs, cannot exceed one third of gross income .

Mortgage interest charge: calculated plus

For reasons of caution, the burden of mortgage interest for determining this sustainability is assumed to be at a higher rate than it could be in the current low-interest environment. The financial sector is based on an indicative long-term average interest rate of 5%.