Home financing in Switzerland

1. Home financing in Switzerland: how much deposit do you need?

You need to be able to pay at least 20% of the property value upfront. Don't invest your entire savings in your new home, however. Keep at least 5% of the property's value as a reserve.

A maximum of 80% should be borrowed in the form of a mortgage. For example, the bank values a property at a million francs. You must be able to put down at least 200,000 francs yourself.

2. Where to get your deposit

If you are buying a property that you yourself will live in all year round, you can finance it using money from your pillar 3a  and pension fund. A maximum of half of the deposit may come from your occupational pension – i.e. 10% of the property value.

If you choose to tap into your pension capital, it is up to you whether to make an advance withdrawal, or pledge those assets as collateral.

You must be able to raise 10% of the purchase price with your own funds that are not taken from any occupational pension scheme. These include:

• Savings

• Securities

• Advances on inheritance/gifts

• Pillar 3a savings

3. What can you afford?

In addition to your deposit, mortgage lenders look at your income. They will only approve a mortgage if the regular costs do not exceed a  third of your gross income. In this way, the bank ensures that you can afford the property.

The regular costs include a notional mortgage interest rate of 5%, repayments, and maintenance and ancillary costs. Further information on affordability and loan-to-value ratio can be found in the linked article.

Would you like an initial assessment of whether you can afford a property? You can find out quickly and easily with the Comparis mortgage calculator.

4. Borrowing to buy a home: the mortgage

A mortgage is a specific type of loan to buy property. There are various mortgage models in Switzerland. The most common are the:

• Variable-rate mortgage

• Fixed-rate mortgage

• Saron mortgage (formerly the Libor mortgage)

5. Home financing: first and second mortgages

Most people need to take out a loan to buy a home. The mortgage is usually divided into two parts:

• The first mortgage can be taken out for a maximum of two thirds of the market value of the property.

• The second mortgage fills the financing gap between the required deposit and first mortgage, and the purchase price.

In principle, you can only apply for a mortgage once you have found a suitable property. A complete and easily verifiable application increases your chances of being granted the loan. Find out here what documents you need to get financing for your home.

6. Arranging a mortgage: how to find the right deal and partner

It is not easy to choose the right mortgage model to finance your new home. Saron mortgages are currently the cheapest option. If you don't want to take on market risks, you'll be better with a fixed-rate mortgage.

Keep an eye on the changes in the mortgage market and subscribe to services such as our mortgage barometer. It pays to collect and compare different quotes. If you don't like haggling yourself, you can get professional support.