Mortgages and real estate

What is the aim of VZ’s mortgage management service?

VZ’s mortgage management service aims to lower living and interest rate costs for our customers over the long term. This is based on three cornerstones: 

• We sit down together with each customer and develop an individual mortgage strategy comprising the optimum mortgage amount and the right mortgage model / mix of terms. 
• This strategy is then implemented without any conflicts of interest that could cost you a lot of money.
• By actively assisting you at all times, we make sure that your mortgage constantly reflects any changes in requirements or circumstances.

Why do I benefit from consistently low-cost mortgages at VZ?

The mortgage business can be divided into three parts: refinancing, risk insurance and administration. Swiss banks usually perform all three of these functions: they are a lender, risk carrier and administrator all in one. Their dense network of branches in particular means that administration costs are more expensive than in other countries.

HypothekenZentrum, a subsidiary of VZ, broke this mould a number of years ago. It focuses on the administration side of the business and refinances mortgages via a secondary mortgage market with institutional investors such as pension funds, life insurance companies or banks. By specialising on this aspect and not having a dense network of branches, HypothekenZentrum is able to keep its costs far lower than traditional lenders. This is reflected in the lower mortgage prices that we are able to offer our customers.

Who is the mortgage management service suitable for?

VZ's mortgage management service is suitable for all owners of owner-occupied property, rental apartments as well as single-family and multi-family residences in Switzerland. It is also suitable for people wishing to buy property.

How does the classic interest rate alarm work?

The mortgage monitoring system checks for changes in interest rates for all fixed-rate mortgages. You can set lower and upper interest rate thresholds for various fixed-rate mortgage terms. As soon as the price of a fixed-rate mortgage passes one of these thresholds, the system alarm sounds and automatically sends you an e-mail. You can then consult our experts and decide whether the time is right to switch to a fixed-rate mortgage or whether you want to set a new alarm. We define the alarm together with you based on your personal mortgage strategy.

How can I use the alarm service as an intelligent interest rate hedging tool?

Simply determine a maximum average amount of annual interest you wish to pay over a period of ten years, for example. If interest rates go up, the system will alert you as soon as it is better to switch to a fixed-rate mortgage so that you don’t end up paying more than your required average interest amount for the period in question.

Who is the mortgage monitoring system suitable for?

The alarm service is suitable for anyone wanting to hold off taking out a fixed-rate mortgage until a certain interest rate level is reached.

What are the advantages of the mortgage monitoring system?

You benefit from the favourable conditions offered by money market mortgages, while also being able to keep an eye on interest rates without having to closely follow market events yourself each and every day. This means you can respond to interest rates in good time and ensure that you pay low mortgage interest rates over the long term.

How does a real estate pension scheme work?

An existing mortgage is usually topped up to a maximum of 50 percent of the market value and taken as a fixed mortgage with a term of 10 to 15 years. Some of the money is used to pay the mortgage interest for the entire term of the mortgage in advance. You receive the rest to use as you please. You could use it to finance your living costs or for minor renovations, for example. After the fixed-rate mortgage expires, you can extend the real estate pension or you can sell your home or transfer it to your children.

What are the requirements for a real estate pension?

Real estate pensions are only possible for properties with a market value of at least one million francs and that are in a good condition. They are not possible if you need to carry out major renovations. Your existing mortgage should be low enough so that after topping it up to a usual maximum of 50 percent of your property’s market value and deducting interest costs for the entire term of the new fixed-term mortgage, you have enough money left to use as required. You should also be at least 65 years old. Real estate pension mortgages usually have a term of 10 or 15 years, meaning retirees can continue to live in their homes until around the age of 80.

Who is a real estate pension scheme suitable for?

A real estate pension scheme is suitable for retirees who would like to live in their home for as long as possible, but only receive a small pension income. A real estate pension also ensures that a surviving spouse can remain in their own home. After the death of a spouse, banks usually check whether the affordability requirements are still met given the lower pension income. This is not necessary with a real estate pension because all the interest has already been paid in advance until the end of the mortgage term.

Do I have to sell my home when the real estate pension expires?

When the fixed-rate mortgage expires, checks are carried out to see whether it can be continued. If this is the case, another mortgage can be taken out. By this point, however, homeowners are usually 75 to 80 years old and tend to either sell their homes or pass them on to one of their children.

Why is now a good time to take out a real estate pension mortgage?

Interest rates on fixed-rate mortgages with long terms are currently extremely low. This means that with a maximum mortgage of usually 50 percent, the amount of interest charged on the topped-up amount is lower. As such, you have more money left to help boost your income.

When does it make sense to have a property valued?

There are many reasons for wanting to have a property valued by professionals:

• You might be interested in buying it and want to be sure that the asking price is reasonable.
• Or you could be thinking about selling it and want to know what sort of price you can expect. 
• Perhaps you want to know how much money is tied up in your real estate or how the value of the property has changed in recent years.
• If you are getting divorced, you could need to know the current market value in order to divide up your marital assets.
• You might be in a community of heirs and need the current value to use as the basis for fairly dividing up the inheritance.
• You could be about to renegotiate the terms of your mortgage with your bank.
• If you are planning a major investment, you might want to know how much the property will be worth before and after renovations are carried out.
• You could want to know how much rental income you would receive if you decided to rent out your property.

When is the hedonic method used?

With the hedonic method, the property does not have to be viewed. In simple terms, the market value is determined based on the recent sale values of comparable properties in the same area, as compiled in a database. Here, VZ takes into account data spanning thousands of property sales carried out over the previous 12 months.

The hedonic method is mainly suitable for owner-occupied properties and "standard" properties, that is to say ones whose values do not fluctuate hugely, which do not have direct lake access, are not subject to preservation orders or are not located in agricultural zones, for example.

When is it a good idea to have a traditional valuation involving a viewing?

A traditional valuation is primarily recommended for unusual properties, for example luxury and highly desirable properties or real estate in remote locations. The hedonic valuation method would not provide a reliable estimate for these types of properties because there is not sufficient comparative data available. We also recommend the traditional valuation method if the valuation is to be used as the basis for negotiations in the case of divorce or an inheritance, for example.