“Excuse me!? Noé, you know it is costly to become an owner? And you’re telling us that in reality it makes us save money?… You are going to have to elaborate a bit.”
Perfect! So let’s start at the beginning, back in the days, my wife Zoé and myself used to live in an 80m2 apartments in the center Lausanne. Our rent was 2,200 CHF. The building did not pay much, it was even rather old-fashioned. But, on the market, the apartment was worth the hefty amount of 800,000 CHF.
(The owner achieves an investment return of (2,200 CHF x 12 / 800,000 CHF x 100) =3,3% !)).
We thought that if we could rent a property of this value, we should have enough solvency (55)to buy one of the same amount. However we wanted something brand new. after researching a little, we found a rare gem just outside of town, in the stunning commune of Chalet-à-Gobet.
Without thinking twice, we put together the usual paperwork and present it to our banker, who then confirms that the bank agrees to loan us the necessary amount at a fixed interest rate of 1,2%.
This gem of an apartment, at the bottom of a brand new building costed us 770,000 CHF, including the parking spot. Our down payment, representing the 20% of personal investment required, amounted to 154,000 CHF. The mortgage loan on the other hand, is 616,000 CHF, divided in two ranks:
Each month, I pay 1,258 CHF to my bank, which amounts to the interests and the reimbursement of the 2nd rank loan over the next 15 years.
In simpler terms, in comparation with the 2,200 CHF of rents, I save 943 CHF per month to live in an apartment of the same value. Which amounts to 11,316 CHF of savings per year!
Better: after 15 years, I will only pay 616 CHF per month to my bank, amounting to a saving of 1,584 CHF per month, or 19,000 per year.
But speaking of savings… Check out the following article to discover which surprises await you on your tax slip (47)after buying property!