Financial institutions do not calculate with the actual costs, but with the so-called imputed costs. Our Affordability calculator helps you to gain a rough estimate in advance of whether financing is feasible. As a rule, the affordability should not exceed 36 per cent and the loan-to-value ratio should not exceed 80 per cent.
The listed purchase price plus any renovation and remodeling costs
This refers to bank account balances, securities, life insurance policies, anticipated inheritances, and pension assets (2nd and 3rd pillar).
Enter your household income here as a gross amount (before deduction of AHV and pension fund contributions).
Realise your dream of owning your own home – MY HYPOTHECA supports you with its many years of experience. When it comes to calculating affordability and finding the right mortgage.
Affordability is a key figure that measures the ratio between your income and the recurring costs of your property. As a rule of thumb, no more than 33% to max. 39% of your income should be spent on the property. It is a ratio that is used to check your mortgage application and also helps you to bring more transparency to your budget planning.
You can find out more about calculating the affordability of your mortgage in our knowledge article “Affordability and loan-to-value”
The loan-to-value ratio calculates the ratio between the value of your property and the mortgage. For owner-occupied homes, the maximum loan-to-value ratio is 80%. For loan-to-value ratios of 65% and lower, you can expect an even more favourable mortgage rate. Very low mortgages or mortgages that are too small (under CHF 200,000) are often unattractive for banks. This is reflected in a higher mortgage interest rate for you.
You can find more on the topic of collateralisation in our knowledge article “Affordability and loan-to-value”
You can use your pension assets from pillar 3a and the pension fund to buy a flat or house. Pledging 2nd and 3rd pillar assets is one option, while early withdrawal is the second option for financing the purchase of your own home. We show you the options and their advantages and disadvantages. We also explain the tax implications of early withdrawal and pledging.
Even if the affordability calculator does not show a “green” result at first glance, you should not throw in the towel but instead seek a non-binding conversation with MY HYPOTHECA. The affordability and loan-to-value limits are not defined equally strictly across all mortgage institutions. Our mortgage advisors know the right contacts for your individual situation.
Calculating affordability, usually using an online calculator, is the first step in getting a rough idea of whether you can afford your dream home. However, the affordability calculation for the mortgage is based on the banks’ risk rates and not on the actual, current mortgage interest rates. The hypothetical interest rates of 4-5% per year for the affordability calculation are based on very long-term average values and can be described as conservative. In this way, the mortgage lender wants to ensure that the affordability of the mortgage is guaranteed even if interest rates are significantly higher than at present.
The mortgage lender also remains on the conservative side when calculating the loan-to-value ratio and always takes the value determined by the valuation model as the basis for the loan-to-value ratio. This may be lower than the purchase price. Especially when it comes to a property that has a certain collector’s or luxury character, the loan-to-value ratio and the purchase price often differ.
Firstly, enter the purchase price. Be sure to summarise the actual price of the property here, including any conversion and renovation costs. Then enter the annual gross income of your household and add any available equity. Our Affordability calculator will show you whether the imputed costs of your dream home are affordable and whether your own funds are sufficient.
Don’t underestimate your financial possibilities
People often underestimate their own possibilities. It is therefore important to enter your household income as a gross figure, i.e. before deducting all AHV and pension fund contributions. When entering your own funds, you should include all available assets; in addition to possible inheritance withdrawals, you should also consider money in pillar 3a, a pension policy and the pension fund. These tied assets can at least be used for owner-occupied residential property.
The affordability compares all the expenses of a property (interest, amortisation, ancillary costs, etc.) with all the income of a household. The result should be around 30% to 39% so that you can obtain a mortgage.
The loan-to-value ratio compares the amount of the mortgage with the value of the property. The difference is your own funds. An example: Value 1 million, mortgage 800,000 francs, own funds 200,000 francs. Loan-to-value ratio 80%.
The MY HYPOTHECA team of experts is looking forward to an initial discussion