Why provisions are so important

Article from 15.04.2021
Why provisions are so important

In retirement, one expects an income gap of between thirty and forty percent. Even so, the mortgage payments shouldn't make up more than a third of your income. Many homeowners underestimate this calculation, as well as the renovation and maintenance costs.


A large number of property owners have to rethink their housing situation with a view to retirement. However, many do this only a few years after retirement. Industry experts estimate that around a third of senior citizens have to sell their house when they retire. This although they actually intended to stay in their own four walls until the end of their lives.

Financially safer without debt

The subject of "self-provision" or maintaining Independence is often not an issue for seniors. But when pension income from the first and second stage is too low and selling an existing home becomes the only option. Banks understand this potential and for this reason, the majority of banks require that second mortgages must be paid back by the time you retire. Many property owners also voluntarily amortize their first mortgages. Without debt, seniors feel financially more secure and independent.

Maintain financial leeway

In principle, a loan-to-value ratio of fifty percent is considered sensible for retirees. According to real estate experts, the fact that it is usually more difficult for seniors to repay them if necessary speaks against an even further or full amortization of the mortgage. For this reason, it makes sense to only invest enough money in paying off the mortgage that the financial headroom is retained. There are always sudden expenses: There may be unexpectedly high maintenance costs. For this reason, one should carefully consider the pros and cons of reducing your mortgage debt.

Underestimated maintenance costs

Many retirees are worried about the often underestimated renovation and maintenance costs when buying their own home. A renovation fund should not only be set up for condominiums, but also for a single-family home. As a rule of thumb, one percent of the property's value should be set aside annually for maintenance and ancillary costs. This financial cushion helps when renewal and renovation work is due. If a property is already a bit older or in poor condition, the maintenance costs can quickly be much higher. For example, a new heating system should be installed or renewed at least every 30 years, which depending on the heating system, can cost up to several tens of thousands of francs. A modernization of the heating system is generally recommended after around twenty years.

Avoid increasing the mortgage

Provisions should also be made for urgent renovations and conversions. With this, homeowners avoid having to increase the mortgage. If work on the property is necessary and there are no other reserves, this is often the only way to finance the renovation costs. From a tax point of view, it is also worthwhile to coordinate renovation and maintenance work and to plan it precisely. Because expenses that benefit the maintenance of the property can be deducted from your taxes.


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