Buying house or apartment in CH

Buying an apartment in Switzerland involves several steps, and here's a simplified breakdown for understanding:

1. Initial Financial Check & Mortgage Pre-Approval (Early Stage):

•  Self-assessment of finances: Understand your income, savings, and existing debts.

•  Bank appointment: Meet with a bank to discuss your financial situation and get a preliminary assessment of your borrowing capacity.

•  Minimum equity: You'll generally need at least 20% of the property's purchase price as a down payment, with at least 10% coming from "hard" equity (savings, Pillar 3a, gifts). The remaining 10% can come from your Pillar 2 (pension fund), if permitted.

•  Mortgage pre-approval: Obtain a pre-approval or financing commitment from your bank. This tells you the maximum amount you can borrow and shows sellers you're a serious buyer. This is crucial before you start making offers.

2. Property Search & Offer:

•  Define criteria: Know what you're looking for (size, location, amenities, budget).

•  Property viewing: Visit properties that match your criteria.

•  Make an offer: Once you find a suitable apartment, you'll make an offer to the seller.

3. Reservation Contract / First Signature (Optional, but common):

•  Reservation agreement: Sometimes, a reservation contract or preliminary agreement is signed, often with a nominal deposit (e.g., up to 10% of the purchase price). This secures the property while further checks are done.

•  Important note: These reservation contracts are generally not legally binding in Switzerland. If the purchase falls through, the deposit might not be fully refunded, so be cautious and understand the terms.

4. Notary Involvement & Purchase Agreement (The Key Signature):

•  Notary's role: In Switzerland, a public notary is essential for real estate transactions. They act for both buyer and seller.

•  Contract drafting: The notary drafts the official purchase contract. This contract contains details like parties involved, purchase price, payment terms, and the date of ownership transfer.

•  Review the contract: You should have ample time to review the contract thoroughly, ideally with legal assistance if needed, before the notary appointment.

•  First Signature (Official): This is the publicly certified signing of the purchase contract before the notary. This is the legally binding step in the property transaction.

5. Bank Confirmation & Mortgage Registration:

•  Bank is confirmed: Once the purchase contract is signed (or even before, with a strong pre-approval), the bank will finalize the mortgage details and confirm the loan. This means your financing is secured.

•  Debt instrument creation: The notary, in collaboration with the bank and owner, prepares a lien agreement (often called a debt instrument or mortgage certificate) which specifies the details of the property lien (amount, interest, etc.). This acts as security for the loan.

•  Land Register entry (Mortgage Registration): The notary submits the registration of this debt instrument to the land registry office. This entry officially secures the bank's claim on the property.

6. Loan Disbursement & Transfer of Ownership:

•  Second Signature -> Loan disbursement: The bank typically disburses the mortgage loan amount directly to the seller (or their representative, like the notary) after the purchase contract is signed and the mortgage is registered (or provisionally confirmed) in the land register. This usually happens around the same time as the transfer of ownership.

•  Payment to seller: The full purchase price (including your equity and the disbursed loan) is transferred to the seller.

•  Transfer of ownership: You legally become the owner when you are entered as such in the land register. This is also handled by the notary. At this point, the keys are usually handed over.

Key things to remember :

•  Notary is crucial: The notary handles the legal aspects and ensures everything is done correctly.

•  Equity is vital: Be prepared with at least 20% of the purchase price in equity.

•  Borrowing capacity: Your housing costs (mortgage interest, amortization, maintenance) should generally not exceed one-third of your gross income.

•  Additional costs: Factor in notary fees, land registry fees, and property transfer taxes, which vary by canton and are not typically financed by the bank.

•  Permits (for foreigners): If you are a non-Swiss resident, you may need a foreign buyer's permit. The notary usually applies for this on your behalf.