How will mortgage providers determine your loan qualification ?

When requesting a loan, mortgage providers will make sure that you possess the necessary funds (read : down payment), but also that your income is sufficient to obtain it.

Criteria when evaluating your income

• Sustainability

Mortgage providers want to make sure that your income is sustainable for the future. A person that is in probationary period, or with a fixed term on their employment contract, or a self-employed with a short history will have some obstacles finding a lender willing to consider the income as sustainable.

• Other liabilities

Car leasings, personal loans, other mortgage loans, alimony payments, etc will also be taken into account, and will lower what is considered your sustainable income

Exemple :

Below, a calculation of the necessary sustainable yearly gross income according to the ASB guidelines (Association Suisse des Banquiers = ASB) :

Purchase price : CHF 1 mio

Mortgage requested : CHF 800k

Theoretical interest : CHF 800’000.- x 5% = CHF 40’000.-

Theoretical maintenance fees (1% of the value of the property) : CHF 1’000’000.- x 1% = CHF 10’000.-

Principal/amortization : CHF 134’000.- / 15 = CHF 8’930.-

Annual theoretical mortgage costs : CHF 58’930.-

In that case, your annual gross income will need to be at least 3 times the yearly theoretical costs, CHF 176’790.-

Bonuses and variable sources of income are taken into consideration depending on the mortgage policy of each lender (no general ruling).

Regarding other liabilities (car leasing, personal loans, etc.), their annual costs will either be deducted from your income or added to the theoretical mortgage costs, depending on the financing policy of the lender (no general ruling).

You do not meet these criteria ? Get in touch with us, as plenty of our partners are more flexible than what is required by the ASB guidelines.

This article could be of interest : Calculators