Existing property
Lending value, current mortgage and possible headroom.
Invest further
Check whether a further property is possible.
A further property or an investment property can be interesting. But rental income is not the same as profit, and the risk of your existing property has to be taken into account.
Starting point
Existing property as a starting point
Some owners check whether they can increase the loan-to-value on their existing property in order to create equity for a further object. The bank reviews both properties and your overall affordability in the process.
Increase the mortgage
Only possible if value, income and securities fit.
Equity
Additional capital could serve as equity.
Investment property
Purchase price, rent, location, condition, vacancy and costs.
Overall burden
Both properties are considered together.
What the bank wants to see
- Purchase price and value of the second property
- Tenancy agreements or rent roll
- realistic rental income
- Condition and renovation needs
- Maintenance, ancillary costs and management
- Vacancy risk and location
- your affordability with both properties
Rental income is not profit
Rental incomeplus
Mortgage interestminus
Maintenance and repairsminus
Management, insurance, vacancyminus
Taxes and provisionsminus
Only after these deductions can you see whether a property can really make sense.
Don't plan pension wrongly
Pension fund money is in principle intended for owner-occupied home ownership. For investment properties it should not be planned in as normal equity.
Risk for your home
If you increase the loan-to-value on your own home, more risk lies on your home. So calculate bad scenarios too: higher interest rates, vacancy, repairs.
Taxes and yield
Rental income is taxable. Debt interest, maintenance and costs can be relevant, but the rules depend on the situation and the canton.
From rent to net income
The starting point here is the rent without separately billed ancillary costs. After that we only deduct costs that the owner bears themselves.
| Position | Example per year | Classification |
|---|---|---|
| Rent per month, excluding separately billed ancillary costs | CHF 3’000 | The actual rent for the use of the property. |
| Rent per year | CHF 3’000 × 12 = CHF 36’000 | Starting amount before the owner's costs. |
| − Maintenance, management and insurance | − CHF 5’500 | Simplified assumption for costs that remain with the owner. |
| − Vacancy and provisions | − CHF 2’500 | Simplified buffer for rental shortfalls and later works. |
| Remaining net income | CHF 28’000 | This amount is used for the simplified capitalised value calculation. |
What about the ancillary costs? Advance payments by tenants for heating, hot water or other separately billed ancillary costs are not part of the rent of CHF 3’000 in this simplified example. They are therefore not deducted again as a lump sum. What matters are the costs that actually remain with the owner after the settlement.
Net income ÷ capitalisation rate = capitalised value
CHF 28’000 ÷ 4 % = CHF 700’000
What do the CHF 700’000 mean? They are the calculated value that results from CHF 28’000 in annual net income and an assumed capitalisation rate of 4 %.
The CHF 700’000 are neither automatically the purchase price nor the lending value, and also not a financing commitment. A bank can calculate with a different sustainable rent, different costs or a different capitalisation rate.
| Net income | Capitalisation rate | Capitalised value | What changes? |
|---|---|---|---|
| CHF 28’000 | 3.5 % | CHF 800’000 | Low rate, for example with a stable location and lower perceived risk. |
| CHF 28’000 | 4.0 % | CHF 700’000 | Middle assumption of this example. |
| CHF 28’000 | 5.0 % | CHF 560’000 | Higher rate with more risk or a higher yield expectation. |
There is no generally «good» capitalisation rate. Location, type of object, building condition, tenancy agreements, vacancy risk, interest rate environment and regional demand determine which rate is plausible. For a purchase review, the rate used by the bank should be requested.
A higher loan-to-value on your own home links the risks of both properties. So also calculate scenarios with higher interest rates, several months of vacancy and an unplanned renovation.
Taxes
Understand taxes
Property taxes explained clearly.
Imputed rental value with the reform from 2029, debt interest, maintenance, rental income and property gains tax – explained for orientation, not tax advice.
Are you checking a concrete investment property?
Describe the starting situation and idea. We structure the next questions – from equity through affordability to a realistic net income.