Personal loan for real estate
Would you like to fulfill your dream of owning your own home, but are unsure whether you can afford it with your equity? Buying a property in Switzerland is a significant investment and often a life-changing decision. In most cases, financial support from banks is essential.
But how can home or construction financing be successful and what financing options are there for buying a property?
In this context, a personal loan can be an attractive option for realizing your dream of owning your own home or renovating an existing property. Miro Kredit AG offers you a reliable platform to compare suitable loan offers and find a tailor-made solution for your real estate financing.
When does a personal loan for the purchase of real estate make sense?
A personal loan for the purchase of real estate can make sense in various situations – especially if you want to invest in your future by buying a property. For example, if your equity is not sufficient to fully finance the property from your own funds, a real estate loan in the form of a personal loan can be helpful.
On the other hand, a real estate loan is also a good option if you want to renovate your existing home. In this way, you can give yourself financial leeway and spread the cost of your property over a period of time. A personal loan can also be an attractive solution for the purchase of vacation homes or investment properties where conventional mortgages may not be available.
Loan for the renovation
Renovating a property can be a financially rewarding investment – especially if the value of the property increases as a result of the renovation and refurbishment work. Whether it’s modernizing an old building, replacing the kitchen, redesigning the garden, or installing solar panels – renovation projects often require considerable financial resources.
So if you already own a property and want to renovate or refurbish it, a renovation loan can be useful. This offers a flexible and quick financing solution so that you can tackle the renovation of your home.
Advantages of a personal loan over a mortgage
Mortgages and personal loans fulfill different purposes and have different framework conditions. In the case of a mortgage for a renovation, the bank requires a pledge as security for the real estate loan. This consists of the financed property, which is known as a mortgage. If you are unable to pay the interest or repayments, the lender has the right to sell the property and use the proceeds to settle the outstanding debts. The mortgage note specifies the amount of the mortgage or loan on the property.
To avoid this, you have the option of taking out a personal loan. With such a personal loan, you can avoid increasing the mortgage note. In this way, you can not only save the notary costs for increasing the mortgage note but also ensure that you receive the loan as quickly as possible, as personal loans are usually granted faster and more straightforwardly than mortgages. A personal loan is therefore often the better choice for renovating a property for many reasons.
Note additional costs
As already mentioned, when purchasing or renovating a property, there are often additional expenses in addition to the purchase price or renovation costs that you should definitely take into account. These include, for example, legal fees, land registry fees, insurance, taxes, and, if applicable, the costs of a property valuation.
These additional costs of a traditional mortgage can be significant, which is why they should not be neglected when planning your financing solution. A personal loan can help you cover these additional costs and manage your budget effectively.
What is the difference between a mortgage and a loan?
The main difference between a mortgage and a loan lies in the type of security granted to the lender. With a mortgage, the property itself is used as security for the loan. This means that in the event of a default, the lender has the right to sell the property to settle the outstanding debt.
In contrast, the collateral for a loan is not necessarily a property. This means that in the case of a personal loan, other assets or the borrower’s creditworthiness can serve as such insurance. In addition, personal loans are generally not earmarked for a specific purpose.
The decision between a mortgage and a loan depends largely on your financial needs and circumstances. In Switzerland, you generally have to finance 20 percent of the property value with equity, while you can finance the remaining 80 percent with borrowed capital, such as a mortgage.
If you want to finance a renovation, you have the option of topping up your mortgage. Alternatively, you can also take out a separate personal loan. If it is not possible to increase your mortgage, taking out a personal loan can be a flexible option. Personal loans offer some decisive advantages over mortgages.
Advantages of a loan
A personal loan offers several advantages compared to other financing options, especially when it comes to purchasing or renovating real estate:
- Personal loans offer flexible terms and improved repayment options, allowing them to be tailored to your financial needs and capabilities.
- When taking out a personal loan, it is not usually necessary to transfer liens on the property to the lender.
- As you do not need any equity to take out a personal loan, financing is made considerably easier.
- Last but not least, personal loans offer greater flexibility in terms of how the borrowed funds can be used, allowing them to be used for different purposes without specific restrictions applying.
How high is the interest rate for a personal loan?
In addition to the APR, the costs of a personal loan are made up of the loan amount and the term. Based on these factors, you can use our loan calculator to easily calculate the total costs you will incur when taking out a loan. You can choose the loan amount and term yourself, whereby the APR is set by the lender. This interest rate, which is determined as part of a credit check, takes into account all the costs of the personal loan. Currently, the interest rates for personal loans with most Swiss lenders are between 4.5 percent and 11.95 percent.
Is a personal loan taxable?
No, if you receive a loan in Switzerland, you do not have to pay tax on it – on the contrary: as a borrower, you have the option of claiming tax relief on the interest. For this purpose, the interest paid is summarized by credit institutions once a year in a so-called interest certificate. You will then receive this certificate at the beginning of the new year so that you can claim it in your tax return.
If you have further questions about interest and taxes, you should contact an experienced tax advisor to get an accurate assessment of your options.
Conclusion
If you are looking for a financing option for your dream property, then we are the right partner for you. At Miro Kredit AG you will find numerous offers for real estate financing – whether you decide to buy or renovate a property.
Private loan calculation example:
Loan amount: CHF 10,000 without insurance. Repayment period: 12 months
Interest (including costs) amounts between CHF 240.50 and CHF 574.25. Effective interest rate 4.5% – 11.95%. Possible loan repayment period from 12 to 120 months
Processing fees: CHF 0.-. Granting a loan is prohibited if it leads to over-indebtedness (§ 3 Unfair Competition Law – UWG)