Buying Property in Switzerland: Equity, Affordability and Costs
How much equity you need, what banks calculate and which costs surprise first-time buyers.
7 min read · Mortgage & Property
Switzerland has one of the lowest home-ownership rates in Europe, partly because the rules for financing are strict.
The 20 % equity rule
Banks lend at most 80 % of the purchase price. At least 10 % of the price must be hard equity – cash, savings, securities, gifts or 3a money. The remaining equity may come from the pension fund (pillar 2).
- Hard equity (cash, min. 10 %)10 % · 10 %
- Equity from pension fund (up to 10 %)10 % · 10 %
- First mortgage (up to 65 %)65 % · 65 %
- Second mortgage (amortized within 15 years)15 % · 15 %
Affordability test
Banks do not use today's low mortgage rate. They assume an imputed interest rate of around 5 %, add 1 % of the property value for maintenance and an amortization instalment. Total housing costs must not exceed one third of gross income. A CHF 900,000 home with CHF 720,000 mortgage is therefore calculated as 36,000 + 9,000 + amortization, which requires a gross household income of roughly CHF 150,000–180,000.
Amortization
The mortgage above 65 % of the value (second-rank mortgage) must be repaid within 15 years or at retirement, whichever comes first. The first-rank portion can stay for ever.
- Own funds from cash / savings / 3a securitiesCHF 120’000 · 13 %
- Own funds from pension fund (2nd pillar)CHF 60’000 · 7 %
- Mortgage neededCHF 720’000 · 80 %
Example with default values. Open the calculator →
Purchase costs
- Notary and land-registry fees (about 0.2–1 %).
- Transfer tax in many cantons (up to around 3 %); some have none.
- Mortgage note (Schuldbrief) and valuation fees.
Next steps
Run the affordability calculator before viewing flats. A pre-approval from a bank gives you a firm budget and credibility with sellers.