Buying a home in Switzerland

For people who rent and are thinking of buying a home in Switzerland: see if the bank approves, how much money you need and what you pay per month, for a new and an existing home, with a SARON rate and a fixed rate. All next to the rent you pay today.

How to use it

1. Choose the canton and enter the price. The canton's purchase costs and property tax are filled in: change them if you know yours.
2. Enter the household's gross income and the money you have: savings, securities, pillar 3a, gifts and the 2nd pillar (withdraw, pledge or don't use).
3. Enter the rent and charges you pay today, and the charges of the home you want to buy. The results put both homes next to the rent.
4. The “i” next to each field explains it. Example fills in example numbers; Clear puts everything back as it was when you opened the page.

Words worth knowing

• Affordability ratio: the share of gross income the home takes in the bank's test. The bank counts interest at 5% (even if you pay less), amortisation and 1% of the value for maintenance. It must be 33% at most.
• Equity and hard equity: the bank lends up to 80% of the value; the other 20% is yours. At least 10% of the value must be “hard equity”: savings, securities, pillar 3a, gifts. Everything except the 2nd pillar.
• 1st and 2nd mortgage: the mortgage up to 2/3 of the value is the 1st mortgage and can stay forever. Anything above that is the 2nd mortgage and is paid off in 15 years, or by retirement, if that comes sooner.
• Direct and indirect amortisation: with direct, you pay debt back to the bank and the interest falls. With indirect, you put the money in a pillar 3a pledged to the bank and pay the debt off in one go, later; the debt doesn't fall, but the pillar 3a lowers your taxes.
• SARON and fixed rate: with SARON, the rate follows the market rate and changes every few months. With fixed, it stays the same for the term (from 1 to 15 years); leaving early costs a prepayment penalty.
• Construction-period interest: for a home bought off-plan, the bank pays for the works bit by bit with a construction loan. Until handover you pay interest on what has been paid out, and you keep paying rent. At handover, the loan becomes a mortgage.
• Withdrawing or pledging the 2nd pillar: withdrawing (EPL) puts the money into the home, is taxed and lowers your pension. Pledging leaves it in the pension fund as security: the bank lends more, with no tax.
• Condominium, charges and renewal fund: in a building under condominium ownership (StWE/PPE), each owner pays charges every month. Part goes into the renewal fund, which pays for the building's major works: roof, façade, heating.

How it is worked out

The money. From what you have, take out the reserve and the costs the bank doesn't lend: purchase costs, tax on the pillars and, depending on the home, construction-period interest or works. The rest goes into the home. The mortgage is the price minus that.

The bank's rules. The value is the lower of the price and the valuation. Mortgage up to 80% of the value (up to about 90% with the 2nd pillar pledged). Hard equity in the home of at least 10% of the value, plus whatever you pay above the valuation. Affordability ratio up to 33% of gross income.

The payment. Interest at the SARON or the fixed rate, amortisation of the 2nd mortgage, maintenance, charges and property tax. Construction-period interest: the loan is paid out bit by bit, so on average half of it is counted during the works (mortgage × rate × months ÷ 12 × ½).

What is left out. Income taxes (the imputed rental value ends from 2029 and, with it, the deduction of interest), insurance, the move, interest rising over the years and each bank's own rules. They are estimates to think with, not an offer.

Read the guide “Buying a home in Switzerland” →