How to buy a property without equity?

real estate purchase without equity

Like many people, you would like to make a real estate purchase without equity, right? But until now, this operation seemed impossible to you. However, you are convinced that becoming the owner of your home will only offer you advantages.

Indeed, the acquisition of real estate allows to make savings avoiding paying exorbitant rents. Buying a house or buying a home is also a safe and long-term investment that can be considered an excellent investment. As you will have understood, a real estate purchase therefore makes it possible to build up assets and also to protect your family. So there are a thousand and one reasons to buy real estate! The good news is that real estate investment is quite possible even without having equity. Discover in this new article how to buy real estate without equity with the help services of Lica.

Obtain a mortgage without equity to buy a home

Equity is your savings and therefore your money. However, the first real estate purchase is often a difficult task if you plan to build up your own funds only with savings!

Fortunately, there is a unique solution to make your real estate purchase without equity. And yes, thanks to the combination of two financing solutions, it is then possible to make a real estate purchase even without contribution.

By combining two financing solutions, you can make your real estate purchase in Switzerland or abroad without own funds.

Lica supports you!

Here are the two types of financing that we will use to finance your real estate purchase at 100%. We will first detail you here the operation of each of them before taking an interest in financial calculations.

1. Mortgage financing to finance your purchase 80%

This is an important part of the financing of your real estate project. The mortgage loan will generally be used to finance 80% of the price of your real estate purchase. This type of credit currently benefits from very low rates which oscillate between 1% and 2%. The duration of the loan can also be quite long since it is possible to borrow for a period of up to 25 years in Switzerland.

Mortgage financing will therefore be used to finance a large part of your purchase (80%). You will benefit on this loan from a low rate and a long term to repay it.

To obtain mortgage financing and thus make your real estate purchase without own funds, your Lica specialist will inform you about the various documents to be gathered in order to make your request without obligation.

2. Private credit to finance the remaining 20%

private credit is also a solution that will be very interesting to finance the remaining 20% of your real estate acquisition. Indeed, the private credit will therefore be used to fill the part of the financing missing during your purchase. As explained above, mortgage financing will finance the 80% of your real estate purchase and the missing 20% will be financed using private credit.

A personal loan works differently from a mortgage loan. This is a short-term loan that you will repay between 12 and 120 months. The interest rate will also be higher than that of mortgage financing since they will vary between 3.9% and 9.9%.

The conditions for granting a private loan are however less demanding than for a mortgage loan. Again, your agent at Lica will take care of informing you free of charge on the conditions of granting.

What will be my expenses with a real estate purchase without equity?

With a real estate purchase without own, the charges will be higher the first years of possession of the property since you will also have to repay the part of the 20% borrowed in the form a private loan. However, do not panic, you will see that the situation will nevertheless be much more interesting than that of a tenant. In addition, after a few years, the cost of your real estate purchase will be identical to that of a purchase with a contribution of equity.

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

Situation with the repayment of equity:

Purchase priceCHF500,000.00
Acquisition feeCHF25,000.00
Equity in the form of a loanCHF100,000.00
MortgageCHF400,000.00
Mortgage interestCHF6,000.00
AmortizationCHF5,000.00
InsuranceCHF750.00
Management feesCHF1,800.00
Property taxCHF550.00
Condominium feesCHF1,000.00
Reimbursement of equity12 CHF120.92
Annual rent27 CHF220.92
Monthly rentCHF2,268.41

Situation without repayment of equity:

Purchase priceCHF500,000.00
Acquisition feeCHF25,000.00
Equity in the form of a loanCHF0.00
MortgageCHF400,000.00
Mortgage interestCHF6,000.00
AmortizationCHF5,000.00
InsuranceCHF750.00
Management feesCHF1,800.00
Property taxCHF550.00
Condominium feesCHF1,000.00
Reimbursement of equityCHF0.00
Annual rentCHF15,100.00
Monthly rentCHF1,258.33

Some additional solutions to fill your own funds

Apart from a loan to make your real estate purchase without equity, there are other alternatives to complete the regulatory contribution of the 20%. Here are some tips that your adviser Lica discuss with you to optimize your financing.

Solutions for equity contribution:
  • Capital from occupational pensions: to supplement your own funds are an interesting alternative. You can withdraw your pension assets from the second pillar. The operation is possible provided you have at least 20,000.- on your second pillar.
  • Capital from individual pensions: can also be withdrawn to complete your purchase. As for the withdrawal of the second pillar, the funds must be used for the acquisition of a principal residence. There is no minimum required to make a Third Pillar withdrawal.
  • Ask your loved ones for help: if you want to avoid all the risks of indebtedness with banking establishments, ask family or friends for help to make up your own funds. An acknowledgment of debt can sometimes be enough to obtain a loan from your acquaintances.
  • Pledge another existing property as collateral: can be considered as an equivalent contribution to cash. In this case, the bank will estimate a value to retain according to the price of your property.
  • Carry out work: is an interesting solution provided you have good knowledge in the field of construction. The value of the work carried out can thus be counted as a personal contribution.
  • A deposit with a cooperative: is also a possible solution in some cases. In the canton of Vaud, the Vaudoise Mortgage Guarantee Cooperative can tell you about this.

According to this information, there are therefore many alternatives to supplement the contribution of 20% when applying for a mortgage. The income taken into consideration will also be a decisive criterion in the way of building up your own funds. At Lica we take into consideration as many factors as possible in order to bring you the best solution on the market!

Lica – The solution to buy real estate without equity

There are many financing solutions for your real estate project. However, you must choose the option that really suits your needs and your budget. It is indeed not always possible to constitute sufficient savings and the alternative solutions for own funds are not always accessible.

In Switzerland, only Lica can offer an advantageous credit solution to finance the purchase of real estate without equity. In this context, Lica strives to carry out very high quality work in order to maximize your chances of accessing the property.

Now that you are perfectly familiar with financing solutions without equity, take the time to contact our specialists. They will accompany you in a neutral and confidential way in your steps.

Do you have questions before making your request? Our advisers are there to answer your questions 7 days a week directly on WhatsApp. Ask us for more information and we will be happy to answer you!

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