How much property do you have
Buying a house: This is how much home ownership can cost
Measured by income
When it comes to financing, banks pay attention to affordability. The housing costs - mortgage interest, amortization of the 2nd mortgage, ancillary costs and maintenance - must not exceed a third of the gross income. Almost all banks expect a long-term rate of 5 percent for interest and 1 percent of the purchase price for ancillary costs and maintenance. The house or apartment can cost 5.55 times as much as you earn with 80 percent loan-to-value.
- Meier family: 80,000 francs x 5.55 = maximum purchase price 444,444 francs
- Müller family: 120,000 francs x 5.55 = maximum purchase price 666,667 francs
Comparison of equity and income
If we consider equity and income not in isolation, but together, the picture can change, but does not have to:
- The Meier family can spend 488,000 francs because they have more equity than the Müller family. Fritz Meier takes out CHF 368,000 as a 1st and 2nd mortgage. The mortgage lending is 75 percent, the running costs of 80,000 francs are still affordable.
- The Müller family can only spend 400,000 francs because they have less equity than the Meier family. Hans Müller takes out CHF 320,000 as a 1st and 2nd mortgage. The loan-to-value ratio is exactly 80 percent, and the running costs of 72,000 francs are no problem.
Although the Müllers earn more, they have to live more modestly than the Meiers. With more equity, for example an advance withdrawal of 100,000 francs, this would change: With a total of 180,000 francs equity, the family could finance a house or apartment worth almost 750,000 francs.
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