Anyone who plans to finance a property would traditionally expect to have to take out a mortgage with a bank. In the case of a mortgage loan in Switzerland, the future property owner must finance at least 20 % of the property value with their own funds. In addition, the lien on real estate is transferred to the bank (the mortgage lender). The property thus serves as collateral for the bank in the event of any potential default of the borrower. When taking out a real estate loan, the process is a little more straightforward.
Is it possible to take out a real estate loan without equity capital?
In principle, a real estate loan works differently to a traditional mortgage, in that a 20 % contribution of own funds is not required and no lien on the real estate is transferred. In other words, the property does not serve as collateral in the case of a real estate loan. If you want to take out a real estate loan, you do not have to specify the estimated property value when submitting the credit application. However, a real estate loan is limited to a certain amount of credit and the borrower should be able to repay the installments of the monthly loan amount within 36 months. It is recommended that the borrower is able to finance the monthly loan installments with sufficient disposable allowance in their budget.
How are interest rates handled in the case of a real estate loan?
There is no one answer to the question of how high the effective interest rates are for a real estate loan, as the level of interest varies between different credit institutions and also depends on the borrower, including criteria such as personal creditworthiness. The term also influences the level of the interest rate. Therefore, the effective interest rate can only be determined after a credit application has been made. At BANK-now, the effective annual interest rate is between 6.9 % and 10.9 %, but interest rates are lower if you already own your own property.
Who is a real estate loan suitable for?
Real estate loans are preferable to a mortgage if the property buyer has no specified use for the loan and wishes to use it without a fixed purpose, and if they want to benefit from a high degree of flexibility. Nevertheless, the borrower should raise some equity capital to finance the property. This is because the amount of a personal loan is generally not sufficient to purchase a property in Switzerland without also using equity capital. Therefore, real estate loans are particularly suitable for those who need a flexible monetary supplement to buy a property.
How do you take out a real estate loan?
It is easy and straightforward to submit a loan application online in order to take out a real estate loan. Before applying for the loan, it is recommended that you plan your budget carefully and ensure that the loan amount required will not lead to financial shortfalls. If you have determined the desired amount for the real estate loan after planning your budget well, there is nothing standing in the way of a straightforward loan application.