Protect & maintain. The most frequently asked questions about home ownership.

Various factors determine the value of a property. An assessment is based on both property-specific considerations and the location. Depending on the type of property, other valuation methods are also used:

Comparative value method (hedonic method)
The valuation is carried out with the help of computer models: the models compare the property with similar properties in the region using over 70 criteria. Based on market prices actually paid, a statistical process determines an objective value for the property. This method is comparatively cheap and involves little work. It is used for detached houses, apartments and shared properties with a maximum commercial element of 30%. There have to be sufficient comparable properties in the local property market. With this method, however, it is not possible to come up with adequate valuations for historic properties, specialist properties or houses with an above-average amount of land. Financial institutions generally use the comparative value method when checking a mortgage application.

Real value method (intrinsic value method)
The property is valued on the basis of its so-called real or intrinsic value, which is calculated as follows:

real value = value of land + fair value of building (new build value – depreciation + ancillary building and environmental costs)

An expert helps determine the values needed (expert assessment). The expert visits the property and comes up with a valuation based on various underlying factors (e.g. title register, descriptions of the building, etc.). This method is comparatively expensive as it requires a visit to the actual location. It is particularly advisable for dream properties or luxury properties for which no values are available for comparison purposes.

Net income value method
The method is used for investment properties such as shared residential properties or properties used for commercial purposes: the property value is essentially calculated on the basis of rental income. It is a case of establishing what returns can be achieved with the property, less any maintenance and management costs. The income, which can be achieved through renting out the property over the years, is projected and capitalised.

Net present value method (discounted cash flow method)
The property is valued on the basis of estimated future cash flows. These cash flows are discounted in order to determine the capital value of the property. It is an internationally recognised procedure and offers an alternative to the net income value method. This method is also used for investment properties.

The regional real estate market can be highly dynamic. With our property platform for private residential owners, you always have an overview of the supply and demand situation in your local real estate market. You can also find out about planned construction projects and when the next renovations are due. 

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Renovations may help increase the value of a property. In particular, measures to improve energy efficiency (e.g. updating heating, improved insulation) can increase the value of the property. Lower energy consumption also reduces costs. The tax advantages are worthy of note too as expenditure on photovoltaic systems is regarded as tax-deductible by most municipalities, cantons and at federal level. There are also numerous grants for energy-friendly building projects.

As a basic rule, smaller or larger conversion, renovation or improvement measures will be required sooner or later. You should be able to finance smaller jobs from your reserves for ongoing maintenance. Bigger renovations, improvements or climate-friendly conversion measures can be financed in other ways:

Increase your mortgage
Homeowners are often looking to increase their mortgage in order to finance conversion, renovation or improvement plans. This makes perfect sense, but there are two important points to bear in mind:

Banks mainly tend to finance measures intended to enhance value (e.g. a new conservatory). If you renovate your kitchen or replace the heating, these are measures that only preserve value. The bank does not always finance these as the value of the property does not change. Exceptions may apply in the case of low LTV properties: within the 1st mortgage (up to 66.6%), there is normally no problem accessing additional capital.

When an application is made to increase a mortgage, banks check the applicant's income again and assess the property once more. If income is lower or the property has fallen in value, the lender may actually adjust the loan amount downwards. You would then, however, have to repay some money before the lender finances any renovation work.

Draw on pension monies
For the purposes of funding conversions, renovations or improvement measures, the law allows drawing on pension monies from the 2nd and 3rd pillar, although only every 5 years and subject to certain conditions:

• Pension monies may only be drawn early for measures that add value.
• If the pension assets were already considered when applying for your mortgage, you will need your bank's consent.
• If your pension assets have not yet taken into account, you may pledge them for renovation measures. The bank will verify your income and value the property.
• Pension assets drawn are taxed at a reduced rate.

Apply for grants
If you are undertaking environmentally friendly or energy-efficient conversion work on your house or apartment, it is worth looking into possible grants or mortgages with preferential rates. Grants are offered by the federal government, cantons, towns/cities or municipalities as well by regional electricity and gas providers. If you convert your home and have it certified in accordance with the Minergie standard, you may also apply for a Minergie mortgage, which is subject to preferential terms and is offered by many finance providers.