Real estate makes up the largest portion of Swiss households’ assets. However, older homeowners in particular may experience financial problems. That is, when you want to continue living in your own home after retirement, but the pension is little or nothing to cover all daily expenses.
“I hate when people think I’m rich just because I own my house,” one retiree from Pratteln BL told “The Observer.” Its precedent rental value puts a hole in its budget. The 80-year-old has to pay about 3,000 francs more in taxes – a big problem with his small budget. The former self-employed has spent his life investing his savings in his dream of owning his own home. All of the capital is therefore in-house.
According to the consumer magazine, Ticino cantonal councilor Carlo Lepori proposes a new solution for “poor landlords”. Idea: Cantonal banks should offer a special mortgage to all landlords who need it and are forced to sell their house due to taxes on the imputed rent. They have to make a living with it. According to “Observer” information, the idea was not well received by Swiss banks.
Few offers so far – need to weigh up
Such private mortgage offers are therefore still rare, but they do exist. Thurgauer Kantonalbank advertises like this on its website: “Live carefree in your own home with a reverse mortgage on your retirement.” A reverse mortgage is also known as an immo pension. Instead of selling the house, you mortgage the property you live in. The result is a monthly pension that does not need to be reported as taxable income. The house acts as collateral for the bank, the property remains registered as in the land registry and income is not required.
Thurgauer Kantonalbank specifies the following requirements for obtaining a reverse mortgage: Applicants must be at least 60 years old, all or most of the mortgage on the property has been paid off, the property must be in good standing. the location is stable in value and used by the owner.
The “Observer” notes that some seniors who fail to meet these requirements fall outside these criteria.
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Sticking points with reverse mortgage
It is true that financial problems in old age can be solved with an Immo-Rente. But there are also pitfalls that should not be ignored.
In this way, Immo-Rente reduces inheritance in case of death. Reason: The lending bank sells the house to pay off the debt. That’s why reverse mortgages should be more suitable for retirees who don’t have close heirs. It’s also important to compare offers, even if the number of providers is still manageable.
The Swiss Home Owners Association (HEV) and the VZ Vermögenszentrum also help with information about Immo-Rente. They point out that a reverse mortgage is always a loan agreement that simply cannot be reversed. It is also considered an expensive product due to its high fees.
Anyone dealing with such a private mortgage should also note that you will normally terminate your Immo-Rente if you move out of your own home. In this case, the lender has the option to sell the property to pay off the debt. If anything remains from the income, it goes to the former owner or, in case of death, to his heirs.
If the reverse mortgage holder has to move to a nursing home, the home will be forfeited with the move. An alternative to real estate retirement is to rent out your own property and move to a smaller apartment when you retire. Or to take advantage of the good sales opportunities and high prices that the Swiss property market is currently offering. In this case, you should seek advice from experts.