OctoFinance can assist you in acquiring residential or commercial property and in securing financing. Once you have chosen a property, there are various steps to go through, and they are not always easy to identify:
- The first step in buying property is to establish a budget to determine how much you can afford to spend. Our advisors can help you analyse your financial situation to know whether your planned purchase is viable or not.
- Second, you will need to have the property evaluated (collateral value). Financial institutions provide mortgages based on this evaluation. This step is crucial, as the evaluation will have a direct effect on your down payment. It will also give you a very clear idea of the debt you will incur, and therefore of how much capital you need.
- Next, your assets (savings, pension fund assets, 3rd-pillar retirement savings or other assets) should be carefully evaluated. It is essential to measure the fiscal impact of the property purchase, in relation to both taxable income and fluctuations in your assets. In order to take full advantage of fiscal savings, it is important to study the repayment options available.
- The last step is to obtain financing. While interest rates are basically a known variable, there can be differences between financial institutions. Your mortgage may actually consist of two mortgages.
The first is the mortgage for which the debt represents 65% of the buying price. It is not mandatory to pay back this mortgage.
The second, calculated based on sales price and representing the remainder to be financed after the down payment and the first mortgage are taken into account, must be reimbursed (repayment). It can be reimbursed directly or indirectly.
In order to optimise the financing of your property, it is important to analyse your assets and look at different interest rate scenarios and repayment options (direct or indirect). As a general rule, indirect repayment has tax advantages.
Mortgage regulations require that you repay the second mortgage until you reach retirement age, or for a maximum of 15 years (ASB guidelines – July 2014).
In terms of asset structure, a property owner should be able to maintain a balance between available or movable assets and property or immovable assets. Financial planning advice is not the same for everyone. That is why it is essential to analyse current and future financial needs and determine the financial coverage available to you in case of incapacity or death.