By working with a mortgage in Europe, you build a credit history that plays a huge role if you plan further investments abroad (for example, buying real estate and other assets, starting a new business, etc.). It is especially worth noting that building relationships with a foreign bank opens many doors for the development of your overseas activities.
An additional advantage: if the bank issuing the mortgage is a Swiss bank. The banks of this country are known worldwide for their stability and reliability. A copy of the mortgage loan agreement or confirmation of financing allocation by a Swiss bank serves as a kind of guarantee when signing the real estate purchase agreement at the notary. Often, when a mortgage is granted, the buyer receives a Swiss bank check, which is then handed over to the notary at the time of signing the purchase agreement. This is sufficient to start the transaction registration.
Despite all the doubts on the part of our compatriots, a mortgage in Switzerland is possible, quite real and very effective. As a rule, our compatriots without a credit history in a Swiss bank can expect 50-60% financing. Typically, a mortgage loan is issued for a term of 2 to 10 years. After the term expires, the loan can be extended after negotiating with the bank about new, often even more favorable terms. In Switzerland, the practice of paying off the loan principal upon expiration of the financing term is common.
Mortgage interest is usually paid quarterly. Interest rates, as is known, can be fixed or 'floating'. A fixed rate is provided by the bank at the time of concluding the mortgage loan agreement and remains unchanged for the entire term of the mortgage. A 'floating' rate is determined by the market and adjusted regularly. With relatively low market interest rates and trends towards their further increase, it makes sense to choose a fixed rate. This situation is currently typical for Switzerland. Conversely, with high mortgage interest rates (as in our country) and market trends towards their decrease, it is more advantageous to choose a 'floating' rate.
How does a Swiss bank decide to grant a mortgage to our citizen and what are his chances of getting a loan? First of all, it is worth noting that any bank always makes a decision individually. The bank will definitely request a personal meeting with the future borrower. In the first conversation, you will be asked a number of general questions, asked to fill out and sign a so-called 'personal confidential declaration' (self-inquiry confidential financial statement) indicating your first and last name, date of birth, main occupation, marital status, place of residence, place of work and position, nationality, spouse's name, and names and ages of children. The bank will inquire about your income for the past year, as well as the total amount of capital and assets you possess.
Based on this information, the bank may also request additional documents evidencing the availability and origin of funds. For example, for individuals, this could be a confirmation from the workplace or an income statement. For legal entities, a financial report of the company for the last three years. The situation is somewhat simpler with granting loans to companies registered in Switzerland, since such a company can be easily checked.
The bank, as a rule, also asks to provide additional guarantees in the amount of about 20% of the value of the acquired real estate. This can be any assets you own (cash in accounts, securities, land, etc.). If, for example, the buyer purchases a commercial real estate property that generates a certain annual income, then this income may partially or fully serve as a guarantee for the loan. In the case of purchasing residential real estate, you need to be prepared to provide additional guarantees or open a deposit in a Swiss bank, placing a certain amount in it, from which the bank will subsequently deduct the loan interest.
After reviewing the documents, the bank makes a decision on the mortgage issuance. It is also worth noting that not all banks in Switzerland are ready and able to work with foreigners. The fact is that this line of business essentially requires creating a separate department to check the solvency of foreigners and the origin of their capital. This in turn requires additional expenses that some banks are not prepared for, for example, due to limited resources (small private banks) or because of their specialization in one type of activity (e.g., investment banks).
Thus, Swiss banks that work with foreigners are usually large and medium-sized banks. For domestic clients, 'entry' into such a bank is possible, as a rule, only through a special department for working with foreign clients, called private banking. It is worth noting that preference in this case will be given to wealthy citizens with significant capital, because the main goal of the private banking department is not to issue mortgage loans, but to attract monetary investments into various banking products and services.
• A mortgage is a special type of lending that is issued by a bank in the amount needed by the debtor or creditor. A necessary condition is the pledge of the borrower's property (movable or immovable), which, in case of non-payment of the loan amount taken from the bank, is sold (realized) to repay the debt. Today, mortgage lending is a fairly common and relevant topic for many people who need a certain amount of money in the shortest possible time.