Marriage, children and buying your own home – many of these life-changing decisions are ultimately made based on your own financial position. The money available probably has the greatest influence over the latter – whether you should buy or rent your home. Answering this question is far from straightforward. Buying your own home or apartment is not always better than renting.
Is renting or buying the best option?
Moving into an apartment or a house marks a new chapter in life. But there’s one key question to answer before moving into your dream home – is it better to buy or rent? This article explains what you should bear in mind when making this decision.
The dream of owning your own home – what does it mean exactly?
Owning a property sounds very tempting on the face of it. With home ownership, you essentially invest in your own property instead of paying rent to a landlord each month. You can also do whatever you want within your own four walls – and you can structure and revamp your living space exactly as you wish. There’s no landlord who can use this as grounds for terminating your tenancy agreement.
But before you embark on the adventure of owning your own home, you should firstly establish exactly what you mean by your own four walls. What type of property would meet your requirements? Are you looking for a house with a garden in the countryside? Or perhaps a chic, new-build urban apartment right by the railway station? Or maybe a terraced family property close to a major town or city? Note down the criteria your dream home has to meet in response to the key questions and set priorities – this will make your search much easier.
Where do you want to live?
- Are you planning to move to the countryside, into a suburb or right into the heart of the city?
- Do you need good public transport links, easy motorway access or do you prefer to cycle?
- Do you have specific requirements in terms of the facilities the town or municipality can offer?
- What kind of neighbourhood would you like to live in?
What matters to you in terms of style and facilities?
- A basic old building or a modern new development?
- Do you want a garden, balcony or neither of them?
- Do you want a garage, parking space or prefer not to have a car?
- Should it have one floor or several?
- Disabled access or a staircase?
What are your expectations of your living room?
- How many people are going to live in your household and who are they?
- Should there be room for pets?
- How many rooms do you need for eating, sleeping, living or perhaps hobbies or work?
- How many bathrooms does it have and how is it fitted out?
- Is the kitchen and dining room a priority because you love cooking or is that less important to you?
Home ownership – is it worthwhile for me financially?
You’ll now have a much better idea of what type of house or apartment you might consider. So now it’s just a matter of going ahead with the purchase of a property, right? Think everything through carefully beforehand. Buying a property is not always the most lucrative option in Switzerland. Switzerland has the lowest The link will open in a new window rate of home ownership in Europe (in German). This is mainly for financial reasons.
Taxes: both advantages and disadvantages
Owning your own house or apartment actually results in tax disadvantages. While the mortgage interest may seem affordable compared to rent, tax liability nevertheless increases in Switzerland as the imputed rental value is classed as taxable income. However, the mortgage interest and property maintenance costs (such as value-maintaining renovations) are tax-deductible. That sounds great, but don’t forget that these usually expensive investments firstly have to be paid for out of your own pocket. Make sure you have enough money set aside for unforeseeable events.
In addition to income tax, you should also check the general tax liability in the municipality and canton where you intend to live in future. However, you shouldn’t just look at the costs when it comes to owning your own home, you should instead see the property as an investment. If prices go up, buying residential property in a good location can really pay off later on.
Work out the mortgage interest accurately
On the other hand, you cannot assume that mortgage interest rates will necessarily remain favourable over the long term. If you only put down a deposit of 20% – which is the minimum amount – your monthly mortgage payments can quickly rise if interest rates move up again, perhaps even amounting to more than rent. To avoid any unpleasant surprises, we recommend calculating the current interest using our mortgage calculator. The figures you’ll require are the purchase price of your property, how much deposit you can put down and your annual income. You’ll then receive a financing proposal based on what you can afford – in other words, the mortgage interest you can pay with your salary – and an overview of the costs you can anticipate.
So is renting or buying the best option?
The question being looked at here is whether buying or renting a property or an apartment is the best option. As you can see, there is no generally applicable answer.
The key thing is assessing your own personal situation and taking all factors into account when making your decision. You might come to the conclusion that owning your own home is more beneficial despite slightly higher monthly costs. This may be because you value the additional freedom within your own four walls. On the other hand, you may decide that living with fewer complications and obligations is more important to you. Renting may be more in line with your circumstances in life.
Whichever way, listen to your heart, weigh up the pros and cons and ultimately base your decision on your finances. Need help? We would be pleased to set aside time for a personal consultation.