Despite all the scary figures I mentioned earlier, I was confident that with our savings we would be able to buy some kind of modest flat and profit on this extremely low interest.
I spent hours on Comparis looking at houses and flats. We couldn’t afford anything besides a shoebox in downtown Zürich, but there were many flats outside the city and even entire houses that were possibly in our budget.
Having been raised in Switzerland, Kay had the notion that you don’t buy property unless you are 40 or have kids. (That’s not us.) It took some time to convince him that we don’t have to fit into the stereotype for buying to be an advantageous financial choice.
The big question was size and location. Sure, we could sort of afford a 6.5 room apartment (= 5 bedroom flat) or even a 7 room house complete with garage, basement, backyard and everything, but that would mean sacrificing on location.
We do like living in Zürich and realistically, in the next 20 years we will probably change our jobs a few times. With that in mind, we are not quite in a position to commit to a small town an hour and a half away from Zürich city by train/bus.
Who in their twenties wants to worry about catching the last bus back to the middle of nowhere at the end of the night? Not us.
We have to be close enough to Zürich that if one of us would have to get a job outside, we would not have an impossible commute. Buying a car to save on commute time would also kind of negate the “saving” aspect of buying a house.
So we started limiting the search to flats in the vicinity of Zürich city, under 20 minutes to the main station by train. I mean, we just don’t need a house right now. As much as I think it would be cool to have 5 bedrooms and build a photography studio, we just don’t need that much space right now.
I saw a few older flats that could possibly be contenders, but when Kay and I visited a 3 bedroom 80 sq m flat (861 sq ft) it felt cramped and although it was technically IN Zürich, it was kind of a crap neighborhood with nothing going on around it. It was depressing.
Kay was really unimpressed with the old interior and the smell of smoke and other places we saw had 30 year old windows or unfinished interiors that would all require possibly hundreds of thousands in repairs. Some had winter gardens (like an enclosed glass balcony) but no real balcony, aka no grilling. It was always something. And none of the locations were really spot on.
Some older flats also come with “Baurecht“, which basically means somebody owns the land your flat or house is on. They have a 20-100 year contract with people to rent this land from them to build on, and you might end up paying like 400-1000CHF a month just for renting your land. It’s a pretty unattractive detail and makes it hard to sell your house if you do get suckered into a deal like that. You’ll never pay 300CHF a month in mortgage costs if you’ve always got those bloody building rights to deal with.
With all this information, we just weren’t sure buying a fixer-upper or an older flat sounded like a good idea right now.
When I found out how low people’s mortgages were with 1-2% interest rates, I was determined to figure out how buying works. When you break it down, it’s not that hard…
1. Find a place you want to buy.
2. Deposit = 20% of the sale price
20% is the magic number here. The Swiss are rather reserved, hence the large number. I have heard cases of people negotiating the bank down to 15% or even 10%, but with the economic situation turning a little in the last year, many banks are sticking to the 20% rule and the fact is, if you cannot afford to give them the 20% (even if you negotiate down to 10%) then they will not loan to you.
3. Calculate the affordability
The same way that Swiss calculate if you can afford your rent by making sure it is 1/3 or less of your monthly salary, they make sure that you can afford buying a home too.
Interest rates might be historically low right now, but every bank uses a simple method to figure out if you earn enough money to live comfortably with a mortgage. Affordability rates are based on 5% interest regardless of the current prices. If you cannot afford to pay a 20% deposit and 5% interest mortgage, the bank will not back you.
Obviously if interest is at 8-10% you would also need to be able to afford that for the bank to lend you money, but since rates are close to zero right now, every bank is calculating based on the average 5%.
To figure out your monthly costs you can plug everything into a simple Excel sheet and run the numbers to see if buying makes sense for you. Along with monthly interest payments, you need to amortize your mortgage by 1% monthly. The typical Nebenkosten (utilities) you normally pay along with your rent are estimated around 0.7% of your property’s value along with a renewal fund of 0.3%. Flat owners pay into a communal renewal fund to fix things like roofs and home owners save to pay everything themselves.
So, that’s another 1% on top of your mortgage and 1% from the sale price. The total monthly payment still needs to be under 1/3 of your monthly income in the 5% model for a bank to consider this a safe purchase.
Here is a quick affordability model on a 1 million CHF house:
If one has the 200k capital for the downpayment, buying 1 million CHF houses is not actually the most crazy thing in the world right now. It would, however, require an annual household income of approximately 180,000 CHF. (4583.33 CHF X 13 months salary = 178,749 CHF)
But when I was researching house buying, I learned another important lesson: Not every house or flat in Switzerland costs millions! There are actually a handful of flats available for 300-500k CHF as well as many more in the 500-800k range. What does the affordability look like for a 500,000 CHF flat?
Once you have the 100k downpayment, buyers would only have to an annual household income of 90,000CHF to afford a home with this price. And 1250CHF a month on the current model is less than half of what we currently pay for rent. Numbers like these are what turned me on to looking!
The affordability model can also be used in reverse. To find out how expensive of a home you can afford, just multiply your savings by 5 to see which houses you can afford. With 80k you can probably afford a 400k house. With 150k you could afford a 750k house.
4. Make an offer
The fun part of making an offer, countering, and most likely raising how much money you wanted to spend. The real estate market is pretty tight here and most sellers enjoy a couple rounds of offers from bidders fighting to buy a house.
You can be sure that if you buy a preexisting house in a nice location, there will be many people looking to buy it. Some people spend years looking for a house to buy and it’s very likely that your house buying experience will be filled with a lot of heartbreak, unless you are able to shell out a lot of money.
5. Finding a mortgage
Often people will visit some banks before they start looking to buy homes to know that there are already financial institutions who will support a purchase.
After you find a place and agree on a price (Hah! Easier said than done!) it is time to find the best mortgage. This is where you can shop around for the best deal, with lenders bending over backwards to make you their client.
6. Closing and handover
When you get through all the complicated shit of agreeing on a sales contract, having a lawyer or insurance agency proof the contract and recommend changes, house inspections, and a bunch of paperwork about the house and land dating back hundreds of years, you will need to get everything notarized to make the sales contract official and agree on a payment schedule and handover process.
Notary costs usually range around 1.5-2% of the sale price, but depending on what kind of house you buy you might also have to pay for land register and permit applications, which could take the number up to 2-5% of the sale price.
Payment schedules vary depending whether you are buying a new or old house. Older houses might require a small downpayment and then the remaining amount paid when your permit is approved. For people building, there is usually a large downpayment, halfway progress payment and then the final 1/3 or so is due when the keys are handed over.
Once you understand how much you can afford, the whole process is relatively straight forward. Be prepared to spend a lot of time visiting homes and building sites and even more prepared for all the paperwork that will come your way if you decide to purchase.
How does the buying process vary where you are from?
Kay and I have been hiking more in the past few years and the more we hike, the more I learn about myself and what I can handle. We learned pretty quickly that I cannot handle carrying a lot, especially when we climb steep uphill. As soon as the incline hits, my speed drops to a snail’s pace.
On our first few major hikes together, I was always carrying too much and would inevitably give my camera or even my whole pack to Kay when it got tough, which made the hike more difficult for him. With this in mind, we stripped down what I’m allowed to carry (if anything) to the essentials.
For day trips, we often head out with with 1-2 packs. Kay takes his small Camelbak (on the left above) that carries water, our jackets, snacks, sunglasses cases and wallets. If it’s a long hike, I take the even smaller Camelbak hydration pack (on the right above) that carries a bladder, but not much else. I can fit my debit card and a pack of tissues in and that’s about it, but it’s great because I don’t have to chase after Kay to give me a sip of water when I’m dying. I only have to chase him if I want some dextrose.
On more intense day trips, Kay upgrades to his Mystery Ranch backpack to carry cooking gear and I borrow his Camelbak to carry my jacket and things.
The problem is that when we go on city trips we often both would like a small pack to carry our cameras and jackets. So I’m looking for a pack that I can use for hiking as well as city trips and as a carryon when flying.
This Meru pack was pretty light weight and comfortable, which would definitely be a plus for carryon weight restrictions. It fit my camera, even in it’s Kata Access-18 PL bag, and it had a handy mesh pocket on the outside that would be good for storing a jacket quickly. The main compartment had zipper entry divided in two for organization and space for a hydration system. The pack was a bright blue and there were no other options for colors at the store.
It did not have compression straps that I could use to attach my hiking poles to the bag, nor did it have a rain cover (what about my camera!?) and it did not have a spacer mesh to separate the pack from your back and keep your back from heating up your water… (Bleagh!) But for 79CHF, the pack is relatively affordable.
The version I saw at the store was such a lovely colour. Light grey with teal blue accents for the logo. Very girly in my opinion. There was also another raspberry option that I thought was a bit ugly.
The Crea Element has a very sturdy hip belt and I really liked the mesh suspension system. Normally when we walk, the Camelback is in the backpack against your back and it heats up. Usually your first sip of water is cold because it’s the water left in the hose, but then you get a mouthful of warm water thereafter. It’s kinda gross in the summer.
This pack also had a wonderful built-in detachable rain cover. I love the rain cover built into my Lowepro camera bag because it is really handy, but on this pack I also loved that it is detachable so that if you needed to take it out to store some extra things when you are flying for example, you can detach the rain cover and store it separately, or remove it to dry if needed. Genius!
In addition to the rain cover, the Crea Element comes with a waste bag and a “women’s necessity bag”. With the top lid pockets, this gives you a fair amount of options for organizing things.
Unfortunately though, this pack is only about 20L and it did not fit my Kata bag with the camera. I could try to use Kay’s small crumpler bag which really only houses the camera and one lens, but I worried that maybe 20L is really too small to fit much, especially when flying.
The Creon Element is a bigger 25L version of the Crea Element (oddly for the same price…), but unfortunately it does not come in the pretty grey/blue that the smaller pack does. It’s pretty obvious that the smaller pack is for women and the larger pack is for men. This pack comes in a putrid green, blue that wasn’t at the store or black with a horrid red Mammut logo. In my opinion, the red is really screaming, “Hey, I’m an expensive brand, look at me!” It looks worse in real life than it does in the photo.
When it comes down to it, I will choose my pack based mainly on functionality, but obviously I don’t want to walk around with a really ugly pack. This pack also had the suspension system, removable rain cover and it also had just enough room for my Kata bag. Both Mammut bags also have dedicated trekking pole straps that look pretty sturdy. (They are also for ice picks apparently…)
It is questionable if I could fit the Kata camera pack and the Camelbak hydration system in at the same time. Another flaw about the Mammut bags is that they are both drawstring, which is not quite as easy to get in and out of as zippered packs. The Creon Element does not come with the women’s necessity bag and it had less pockets in the top compartment, so overall it seemed a bit more primitive than the Crea Element.
While I was trying to find the Mammut backpacks for sale in the States, I came across Osprey packs for women. I went back to Transa and it turns out they only have the Stratos series for men in supply, but the men’s packs have many of the same features as the women’s. I spent about 45 minutes trying them out, so I think it gave me a pretty good idea about what the Sirrus series would be like.
The Sirrus series all have mesh suspension systems, although it looks like the pack is held a little closer to the back than the Mammut bags, especially at the top and bottom of the pack where they attach. I’m not sure how that would affect airflow, considering that Mammut boasts some “chimney effect” with theirs. This is a 24L zippered pack with easy access, but only one small pocket on the front that houses the detachable rain cover. Small point – the rain covers on the Sirrus/Stratos packs attach with velcro and the Mammut ones have a clip. I feel like the clips are sturdier and the velcro seems a bit cheaper, even though the Osprey packs cost more money in Swiss francs.
The Osprey bags also have compression straps on the side, but Osprey also has a system for storing your trekking poles on the go that looks really cool. I almost always hike with poles (Grandma!) so I’m really interested in this part, but I’ve read some reviews that in the summer the poles rub against your arm when you store them this way, so I’m not sure how effective the system actually is.
Sirrus packs come in turquoise and purple, but again, I’m not a big fan of this shade of purple.
Kay had me convinced that the 20L Mammut pack was way too small, especially for air travel, so I started looking at some of Osprey’s larger 36L packs.
Osprey also designed the Sirrus packs with hip belts made for women so they fit better around a woman’s curves. They also have special shoulder straps so that the backpack doesn’t dig into your breasts when you are walking. I noticed when I tried on the Mammut Creon Element, I had to put the chest strap all the way at the top and the bag still felt a bit like it wasn’t designed for me.
Both the 24L and the 36L Osprey packs have hipbelt pockets that are absent on the Mammut packs. I’ve been jealous that Kay has hipbelt pockets his Mystery Ranch backpack that are not on my Mystery Ranch pack. They would be so helpful for storing tissues, lip balm and lens cleaning clothes on hikes. I blow my nose ALL the time! There is even a little pocket on one of the shoulder straps. I’m sure if Kay had one, he would love to store his GPS in it.
In addition, this pack has a drawstring opening with a pack lid that has two zippered compartments. It also has a second front pocket in addition to a much roomier rain cover pocket than the 24L.
It seems like it’s always a big question of how the camera fits in the pack and whether I have the camera in a camera bag (for protection) and whether that fits as well. If I go for a smaller 24L size, I may run into issues with getting things to fit when I fly, but at the same time, most 34-36L packs exceed carryon requirements so I’m sort of stuck.
I’m also still not the biggest fan of drawstring bags because you really have to take them completely off to dig around in them, but can I really survive flying with only 24L? Maybe I should just follow Kay’s example and buy two day packs. Hah!
Do you have a laundry list of requirements for your backpack?
For the first five years in Switzerland, I assumed that I would never, ever be able to afford a home here. I mean, when I first started I was earning 200CHF a week as an au pair. There was no way in hell I’d ever have enough for a 200,000CHF deposit.
After I changed jobs, Kay and I would still chat about it from time to time. His parents own a house and I was vaguely interested in how the buying process works here, but I didn’t understand it. Kay explained that the aim was not to own 100% of your house and that you would always owe the bank money.
That just didn’t make sense.
I put my house-buying dream up on a shelf for a long time and forgot about it. Years rolled by, we got married last year, and somewhere around November/December, two things became important:
After three-four years of saving from our big boy and big girl jobs, we were actually starting to have a sizable chunk of money.
Everybody was talking about the crazy low interests rates in Switzerland.
When I say “crazy low” interest, I mean it. Interest rates effectively dropped to 0% for Libor mortgages in September/October 2012. That doesn’t include the bank’s cut, but it was enough to pique my interest.
Fixed mortgage rates were hovering around 1.5% and I learned that my FIL’s mortgage payments were about 1/10th of our monthly rent. With that knowledge, I had to at least figure out how it all works!
I made it about two months, but I’m not sure I can keep up with no poo for a few reasons:
My last couple of washes seemed like they didn’t get my hair completely clean. I’d look OK in the front, but greasy enough in the back that I’d have to immediately pull my hair up like I have to on dirty hair days.
My baking soda wasn’t lathering enough and to be honest, with hard water I don’t think I have enough patience to boil water for 10-20 minutes and wait for it to cool every time I want to shower. It’s just too much hassle for me. I also accidentally spilled the vinegar solution once and it went all over the bathroom floor. That doesn’t happen with shampoo. (Yeah, I know there are solutions for that, but I’m just saying.)
As a result of not washing with boiled water, the grey matter and flakes piling up in my comb and brushes were pretty gross. And I don’t really like brushing my hair with all this crap in it so I’ve been washing my brushes every few days. I thought the flakes were just me but….
I actually convinced Kay to try out no-poo for a couple weeks and on the weekend I noticed he also had little white flakes in his hair. He hadn’t washed it for about a week aside from water. He’s never had flakes before now or complained of dry scalp, so I am chalking this up to no-poo and our hard water. (Although Kay still disagrees that our water is hard!)
So with Kay’s flakes convincing me maybe no-poo isn’t the best for us, I washed my hair (twice!) with some sulfate free shampoo last night, conditioned it, and man it looks and feels great today!
I still want to keep shampooing to a minimum because I really value not having to shampoo every night and I think it is better for my scalp, but I am concerned if I leave the no-poo method what I will do about SLS free shampoo. The SLS-free shampoo I have now was a gift from Sweden and apparently it’s not even on the market anymore. Probably out of my budget anyway.
But no-poo was about to become an issue too. They do not sell boxes of baking soda in the grocery here and I was on my last box that my brother brought over for Christmas in 2010. Buying baking soda from the English bookstore is obscenely expensive and there’s no way I’m using little 1tsp sachets of baking soda from the grocery.
So we’ll see what happens. Kay and I decided not to buy anymore super cheap shampoo but we are not sure what to buy since we are mostly limited to brands like Loreal, Pantene, etc in the grocery store.
Any suggestions? I am heading to the US next month so I could stockpile for awhile.