Step 4 - Mortgage Shopping
To finance the acquisition you will probably need a mortgage. At the same time you will need a substantial amount of cash (between 30 and 50%) of the value of the property. The maximum amount of the mortgage is linked to the value stipulated in the bearer mortgage note ("Cartella Ipotecaria"). To get the best deal will require some shopping around.
To get some guidance the section "mortgages" on http://www.comparis.ch/ is very useful. As you can see from the graphic below (1-year "fixed") interest rates in Switzerland are very attractive. Keep in mind, however, that the Swiss Franc is a very strong currency which means that as the years go by, your expense in local currency (EUR, UKP, $, рубл) is likely to increase.
Click HERE to view the current UBS mortgage rates.
It may also be desirable to be introduced to a local banker. In case you need assistance in this area please contact us (see footer).
In any case the bank will do a due diligence check and when you contact bankers you need to be prepared and have the following documents with you:
- Letter of Recommendation from your (home country) banker
- Proof of employment or of regular income
- Identification
When the bank makes you an offer make sure you check the validity of the interest rate. I have seen it almost miraculously go up compared to what was quoted because of a very limited validity of the quoted rate.
Many documents will need to be signed as part of setting up your new Swiss bank account and the mortgage. Amongst others this will include a:
- Deed of Pledge ("Atto di Constituzione di Pegno"), which is basically a guarantee involving the transfer of possession of the property should due payments not be made.
- Permanent Order ("Disposizioni Permanenti")
- Payment Instruction ("Ordine di Pagamento"), in case of a condominium with reference to the PPP ("Proprietá Per Piani") of the property that you are acquiring
- Trust Agreement ("Contratto Fiduciario")
- Terms & Conditions ("Condizioni Generali") of the Bank
In addition you will need to submit:
- Photocopy of the original insurance policy covering damages caused by water and fire ("Polizza d'Assicurazione Rischio Incendio e Danni delle Acque")
