Qualifying
conditions

Before even looking for the property of your dreams, DL can offer you useful advice and help you determine your buying potential. This important step will guide you in the search for your future primary residence.

Your buying potential mostly depends on your personal equity and your income. It is determined using the three following criteria:

  1. You have 20% in personal equity at your disposal (including 10% that does not come from your pension fund or refundable loans)
  2. The costs (interest  + amortisation + maintenance costs) should not represent more that 33% of your income.
  3. A property value that corresponds to the buying price and allows you to obtain up to 80% financing

CALCULATE YOUR BUYING POTENTIAL 

SCHEDULE AN APPOINTMENT

Income

For salary holders, including those who are salaried from their own business, the gross annual income is considered fixed income. If you receive a variable income, it will generally be considered based on half of the average from the last three years.

For the self-employed,  the average net earnings before interest and taxes (EBIT) from the last three years is considered.

For annuitants, the sum and source of all annuities (AVS, AI, LPP, accident insurance, private insurance, etc.) is taken into account.

In addition to these annuities, income from rental properties or return from security accounts could also be considered as income depending on the regulations of each financial institution.

Thanks to our relationships with key market players, we at DL will point you toward the institutions that are ready to make you the best offers.

Calculating debt capacity

Once the loan amount is fixed and your equity qualifications are established, the financial institution will analyse your income and determine the ratio between your future ownership costs (calculated based on a theoretical rate  and your income). In order for the financial institution to grant you the loan, the debt service ratio must not be more than 33%. This means that your living costs should not represent more than one third of your income.

Personal equity

In general, the amount of financing can be up to 80% of the property's value. You must have 20% in personal equity, half of which (meaning 10% of the property's value) does not come from your pension fund or refundable loans.

Furthermore, the transfer fees (communal and cantonal taxes, registration fees at the land register office, TVA, notary fees), which can be up to +/- 5% of the purchase price depending on the canton, should be checked by your own personnel, otherwise they could still possibly be financed.

Know that under certain conditions and based on the guarantees that you are able to offer, your DL advisor could obtain financing up to 90%, or 100% of the purchase price.

DL will help you select the best sources of personal equity (savings, 2nd pillar, 3rd pillar A and B, investments, etc.). These choices will have an impact on your taxation and retirement planning.

DL will offer you excellent advice, whether or not you have to invest all of your personal equity or come up with the funds you are lacking.

Enhancing property value

This concerns the collateral value withheld by the financial institution as a guarantee. The amount of collateral will determine the loan amount, which is in most cases 80% of this value, even when 90-100% financing can be negotiated.

The process of enhancing property value differs from bank to bank since each institution is familiar with its particular locality and has its own methods of estimating value. In addition, internal regulations tend to frame expert estimates, which can lead to many different estimates for the same property.

In case of the estimate being lower than the selling price, the bank will grant you a loan of up to 80% of the collateral value. If you still wish to acquire the property, you will need to bring more from your personal equity.

We are confident in our experience and market knowledge and look forward to shedding light on this important factor in your acquisition.