Rules governing mortgages for foreign retirees in Switzerland
Hey there! Let's dive into the nitty-gritty of retirement in Switzerland, focusing on foreign retirees. We've got two main topics: homesteading and mortgage situations, so buckle up!
First off, let's clarify what rights foreign retirees have in Switzerland. The most important question is whether you can retain your residency permit once you stop working. The answer depends on your financial status to sustain living here without a steady income, mainly to prevent seeking social assistance.
If you've spent years working in Switzerland and receive your pension here, then you should ideally have the means to live comfortably. Now, let's talk about permits. A C permit guarantees the right to stay in Switzerland for as long as you want, but this kind of permit is only available to those with a C permit before retirement.
B permits, on the other hand, have a validity ranging from one to five years, depending on whether you're from an EU/EFTA country or a third state. If you're a five-year B permit holder and plan to retire, consider looking into your eligibility for a C permit before you hand in your lanyard. Short-term permit holders like L are the least likely to be eligible for residency after retirement.
Moving on to mortgages, foreign and Swiss pensioners face similar requirements. The famous "golden rule of home finance" states that mortgage rates plus additional charges shouldn't exceed one-third of a borrower's income. However, the income of a Swiss pensioner is, on average, one-third lower than their pre-retirement earnings, making it challenging for many to meet these standards. If you can meet the mortgage requirements, the bank will likely approve your application.
A word of caution though; banks have stringent affordability requirements, and they're becoming stricter for retirees. In the worst-case scenario, elderly borrowers who no longer meet these requirements may be forced to sell their properties to pay off their loans.
Now, let's touch on a few additional factors for foreign retirees. Generally, buyers in Switzerland need to contribute at least 20% of the property's value as equity when applying for a mortgage. Foreign retirees might not have direct access to Swiss pension funds, but they can use advance withdrawals from eligible pension funds to reduce mortgage sizes. Keep in mind that this would be considered taxed income and could affect future pension benefits.
Finally, having a valid Swiss residency permit is crucial for foreign retirees to gain access to the local financial system and property market. Swiss banks may require additional documentation and guarantees for non-residents when approving mortgages.
- As a foreign retiree in Switzerland, though you can retain your residency permit after stopping work, it depends on your ability to sustain living without a steady income.
- For those with a C permit before retirement, they are eligible to get a C permit that grants the right to stay in Switzerland indefinitely.
- B permits, available to EU/EFTA nationals and third-state residents, range from one to five years, and retirees aiming for a C permit should check their eligibility before relinquishing their B permit.
- When it comes to mortgages, retirees, whether foreign or Swiss, must ensure that the mortgage rates and additional charges combined don't exceed one-third of their income, which many find challenging due to lower Average Swiss pension income.
- Foreign retirees in Switzerland can use advance withdrawals from eligible pension funds to minimize mortgage sizes, but be aware that such withdrawals could impact future pension benefits due to being taxed as income.
