How to buy a property without own funds?

Like many people, you'd love to make a property purchase without equity, wouldn't you? But until now, this has seemed an impossible task. Yet you're convinced that owning your own home would offer you nothing but advantages.

Buying real estate allows you to save money and avoid paying exorbitant rents. Buying a house or apartment is also a secure, long-term investment that can be considered an excellent investment. As you can see, buying real estate is a way of building wealth and protecting your family. So there are a thousand and one reasons to buy real estate! The good news is that real estate investment is possible even without equity capital. Find out in this new article how to buy a property without equity with the help of Lica services.

Obtaining a mortgage to buy a property without equity capital

Equity is your savings and therefore your money. However, the first property purchase is often a difficult task if you plan to build up your equity solely with savings!

Fortunately, there's a unique solution for making your property purchase without equity. Thanks to the combination of two financing solutions, it's possible to make a property purchase even without a down payment.

Here are the two types of financing we're going to use to 100% finance your property purchase. We'll start by explaining how each one works, and then move on to the financial calculations.

Mortgage financing to finance 80% of your purchase

This is an important part of financing your real estate project. The mortgage will generally finance 80% of the price of your property purchase. This type of loan currently benefits from very low rates, ranging from 1% to 2%. The term of the loan can also be quite long, as it is possible to borrow for up to 25 years in Switzerland.

Mortgage financing will be used to finance a large part of your purchase (80%). You'll benefit from a low interest rate and a long repayment schedule.

Your Lica specialist will inform you about the various documents you need to gather in order to apply for mortgage financing without any obligation on your part.

Private credit to finance the remaining 20% abroad

Private credit is also a very attractive solution for financing the remaining 20% of your property purchase. In fact, private credit will be used to make up the financing shortfall on your purchase. As explained above, mortgage financing will fund the 80% of your property purchase, and the missing 20% will be financed with a private credit.

A personal loan works differently from a mortgage. It's a short-term loan that you'll repay between 12 and 120 months. The interest rate will also be higher than that of mortgage financing, ranging from 4.9% to 9.9%.

Conditions for granting private credit are less stringent than for a mortgage. Here too, your Lica agent will be happy to provide you with free information on the terms and conditions.

Please note! When you borrow your own funds, it's impossible to apply for a mortgage straight away. This is because lending institutions will not accept your equity directly from a private loan when granting a mortgage.. That's why it's important to take things one step at a time, and above all to be accompanied by specialists! Your Lica consultant will explain how to proceed and what pitfalls to avoid.

How much will I have to pay if I buy a property with no equity?

With a property purchase without equity, your expenses will be higher in the first few years of ownership, since you will also have to repay the portion of the 20% borrowed in the form of a mortgage. private credit. But don't panic, you'll see that the situation is much more attractive than that of a tenant. What's more, after a few years, the cost of your property purchase will be identical to that of a purchase with an equity contribution.

Here are two tables showing the situation with and without the equity repayment. You'll notice that the rent is quite acceptable during the equity repayment period. Once this part has been reimbursed, expenses become very low, and the situation is identical to a purchase with a traditional equity contribution.

Situation after repayment of equity :

A few additional solutions for topping up your equity capital in Switzerland

Apart from taking out a loan to buy your property abroad without equity, there are other ways of topping up your 20% regulatory contribution. Here are a few ideas that your advisor Lica will work with you to optimize your financing.

Solutions for bringing in your own funds and making your property purchase without equity :

• Funds from occupational pension plans : to supplement your equity capital are an interesting alternative. You can withdraw your pension assets from the second pillar. This is only possible if you have at least 20’000.- in your second pillar.
• Funds from individual pension plans : can also be withdrawn to make your purchase. As with Pillar 2 withdrawals, the funds must be used to purchase a principal residence. There is no minimum amount required to make a third-pillar withdrawal.
• Ask your loved ones for help: if you want to avoid the risk of getting into debt with banks, ask family and friends to help you build up your own capital. An IOU can sometimes be enough to get a loan from your acquaintances.
• Securing another existing property: which will be considered as a contribution equivalent to cash. In this case, the bank will estimate a value to be retained based on the price of your property.

In addition...

• Carrying out work : is an interesting solution, provided you have a good knowledge of the building trade. The value of the work carried out can then be counted as a personal contribution.
• A guarantee from a cooperative : is also a possible solution in certain cases. In the canton of Vaud, the Coopérative Vaudoise de Cautionnement Hypothécaire can give you more information.

According to this information, there are many ways to supplement the 20% contribution when applying for a mortgage. Income will also be a decisive criterion in the way you build up your equity. At Lica, we take into account as many factors as possible to bring you the best solution on the market!

Lica - The solution for buying real estate without equity capital

There are many financing solutions available for your real estate project. However, you need to choose the option that really suits your needs and budget. It's not always possible to build up sufficient savings, and alternative equity solutions are not always available.

In Switzerland, only Lica can offer an advantageous credit solution to finance the purchase of a property without equity capital. In this context, Lica strives to do a first-rate job of maximizing your chances of home ownership.

Now that you're fully familiar with non-equity financing solutions, take the time to talk to our specialists. They will provide you with neutral, confidential support.