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There are many preconceived notions when it comes to real estate finance. We are confronted with this every day. But what is it really about? Today we ask Put Badawi, Head of Pension German-speaking Switzerland at MoneyPark: What impact will the 2021 pension increase have on my home financing?
The Adjustment of the maximum individual AHV pension from 2,370 to 2,390 Swiss francs does not at first glance have any impact on the financing of home ownership. Or does it? The ceiling, the limit amount, for married people increases from 3,555 to 3,585 francs. After all, that’s 360 francs a year. But is there more mortgage in it?
The starting point is the so-called affordability calculation, which stipulates that the imputed housing costs may not amount to more than 33 percent of income. This means that with an annual pension increase of 360 francs, the mortgage can turn out to be 2,400 francs higher than before the pension increase.
Anyone who postpones the AHV pension for another two years, for example because the partner does not reach retirement age until two years later, receives an additional pension increase of 10.8 percent. This means that the mortgage can theoretically be topped up by as much as 15,000 francs. In practice, this is unlikely to happen because only a few financing providers are willing to make an increase of just CHF 15,000.
Due to the affordability calculation, the pension increase has very little or no influence on the financing. What is more crucial, however, is the fact that a federal pension increase is being made to meet the rising cost of living. Whether this marginal pension increase can cushion the higher costs in old age should be questioned critically. In addition to the higher cost of living in old age, the actual cost of living should be taken into account. As of today, these can only be estimated, as neither the mortgage interest market nor rental costs can be reliably calculated that far in advance. This once again confirms that one’s own responsibility for retirement is increasing, which means that every person has to think much earlier than when they retire in order to get their old-age provision up on track.
Put Badawi
Head of Pension German-speaking Switzerland
[email protected]
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