In today's environment with record-low interest rates and uncertainties in many financial investments, private individuals are increasingly looking to invest in multi-family buildings.
The purchase of a multi-family building is financed with equity capital and borrowed capital from a financial institution (bank, insurance company, specialized mortgage provider, etc.).
Equity Requirements
When purchasing a multi-family building, the financing partner requires the buyer to contribute more than 20 percent of the purchase price themselves – that is your equity. The remaining amount is provided by the financing partner in the form of a mortgage loan.
When deciding how much equity to use, you should also consider your asset diversification and tax situation. It's best to seek advice from an independent expert in this regard.
Financing Planning
Anyone planning to buy or build a multi-family building must be able to raise a sufficiently large sum of money. The first step is to determine what financial resources are maximally available and what amount can be used for the purchase.
Important: Funds from the 2nd pillar and pillar 3a may not be used for the purchase of multi-family buildings. However, if you live in the multi-family building yourself, the funds from the 2nd pillar and pillar 3a can be used to finance your own apartment.
Mortgage Loan
The main part of the financing is usually a mortgage loan, for which the multi-family building is pledged. There can be significant differences in the term, interest rate, and amount of the mortgage. Different mortgages in different ranks can even be taken out.
The current interest rate environment and interest rate expectations should also be considered. For the decision on which financing option makes the most sense, comprehensive advice is essential.
This way, you have the chance to achieve a solid and profitable investment with a multi-family building.
Your real estate specialist Titus Spirig!
