Becoming a home owner is a big milestone. That’s why it’s vital to think carefully about the impact of a property purchase on your assets, tax situation and pension provision. It is also important that you draw up a financial plan in advance, determining the initial capital required and the subsequent financial costs. BCGE supports its clients in this process through its various mortgage loan options, bringing to their attention the energy issues likely to have a positive or negative impact on the value of their property.
Q&A with Pierrette Jaton Klopfenstein, Head of the Geneva division, BCGE
How does a mortgage loan work?
To finance a property purchase, whether a primary or secondary residence, the Bank makes money available in the form of a mortgage loan by taking the property it is financing as collateral and evidenced by a mortgage
1.
The loan may not exceed 80% of the collateral value of the property. The financial expert helps to draw up an analysis of the client’s financial situation and mortgage profile, namely: the stability of financial charges over the long term, repayment of the loan using an appropriate amortisation rate, opportunities for low interest rates, a combination of short and long-term loans.
BCGE offer a range of mortgage loans to meet the needs and objectives of any buyer: fixed-rate mortgages, Saron rate mortgages, life annuity purchases, mortgages in France, building loans, and energy efficiency renovation mortgages.
How much equity do you need to obtain financing?
You need to put down 20% of the value of the property as equity, with a minimum of 10% coming from your available liquid assets: bank accounts, 3rd pillar, donations or interest-free, non-repayable loans.
This contribution can come from various sources: cash, proceeds from the sale of securities, your 2nd pillar, your 3rd pillar, a life insurance policy, gifts and loans. The balance can come from the 2nd pillar or other sources.
How do you draw up a financial plan?
The financial plan is based on dividing the financing between the mortgage and your own funds, and assessing your financial capacity to cover the costs.
You also need to take into account notary fees, transfer taxes, land registry fees and the cost of setting up a mortgage note.
It’s worth noting that the purchase of a property has a number of tax consequences that need to be taken into account: rental value, interest charges, maintenance charges, and direct and indirect depreciation.
It is also important to check your insurance cover in the event of unforeseen circumstances such as the death of a spouse or the incapacity to earn a living as a result of illness or accident.
BCGE – partnering with clients to improve their properties’ energy efficiency
When meeting with clients who are interested in restructuring the financing of a primary or secondary residence, or renovating or acquiring it in the first place, BCGE advisers inform clients of the energy challenges likely to have a positive or negative impact on the value of their property2.
The Bank does so in line with the directives of the Swiss Bankers Association (of June 2023). The Bank’s advisers invite clients to have their property analysed, to assess the potential cost of renovation, to consider the associated climate and energy risks and to learn about their legal obligations and the financial possibilities including subsidies, tax reductions and bank financing.
BCGE offers several options to help clients improve the energy efficiency of their homes and increase energy compliance. Such options include the Energy Renovation loan and the Energy Renovation mortgage to finance work based on a CECB+3.
Notes de bas de page
1 According to Article 842 of the Swiss Civil Code) a mortgage note is a personal claim secured by a pledge of real estate, guaranteeing the creditor that the debtor will pay the interest due or repay the loan.
2 BCGE and its advisers decline all responsibility for any matter relating to improving the energy efficiency of buildings and invite their clients to contact specialised third-party service providers at federal level or in the Canton where the property is located.
3 The Cantonal Energy Certificate for Buildings (CECB+) is the official energy label (for all cantons), which indicates the quality of a building’s envelope and
overall energy balance, as well as its direct CO2 emissions, on a 7-level scale (A to G).
