How can you obtain a mortgage in Switzerland?
Swiss mortgage step by step: down payment, credit assessment, affordability rules, documents and bank conditions – with 2024–2025 data and a Hungarian perspective.
What types of mortgage loans exist in Switzerland?
In Switzerland, the mortgage market is organised around three main product types.
Fixed-rate mortgage (Festhypothek) The most commonly chosen option. The interest rate is fixed for a term of 2 to 15 years. It provides predictable instalments and is particularly advantageous when interest rates appear to be rising. In the Swiss market in 2024–2025, 5-year fixed mortgage rates typically ranged around 1.5–2.5%, although this range varied depending on the bank and market conditions.
Variable-rate mortgage (variable Hypothek) The interest rate follows market movements, with no fixed term. It can be terminated flexibly, but it is unpredictable. In 2024, this option declined, as fixed-rate structures offered competitive interest rates.
SARON-based mortgage (SARON-Hypothek) The previously widespread LIBOR-based product was discontinued at the end of 2021; it was replaced by SARON (Swiss Average Rate Overnight). This is based on short interest periods, typically 3 months, and closely follows the policy rate of the Swiss National Bank (SNB, Schweizerische Nationalbank). It is attractive in a low-interest environment, but the borrower bears the risk of interest-rate changes.
How much equity is required, and where can it come from?
Minimum equity: 20%
Swiss banking regulation (based on FINMA – Eidgenössische Finanzmarktaufsicht – guidance and self-regulatory standards) requires that at least 20% of the purchase price of the property be covered by own funds. The bank may finance up to 80% of the property’s value – this is known in the industry as the LTV limit (Loan-to-Value, i.e. loan-to-value ratio).
The 10% liquid-funds requirement
Within the 20% equity contribution, at least 10% must consist of so-called “hard” own capital. This means savings held in a bank account, securities, inheritance, gifts, or other liquid assets. The remaining 10% may be covered by an early withdrawal (Vorbezug) from the mandatory occupational pension fund (second pillar, berufliche Vorsorge / BVG) – but this reduces future retirement benefits and may create a tax liability.
What sources can make up the equity contribution?
Source | Can it be used? | Note |
|---|---|---|
Savings in a bank account | ✅ Yes | Counts as a liquid asset |
Securities portfolio | ✅ Yes | At market value, with bank valuation |
Inheritance, gift | ✅ Yes | The origin must be documented |
Second pillar early withdrawal (Vorbezug) | ✅ Yes | Up to max. 10% within the liquid quota |
Pledging the second pillar (Verpfändung) | ✅ Yes | Does not reduce your pension capital, but it does carry risk |
✅ Yes | With limitations, tax implications | |
Gift loan from parents | ⚠️ Subject to conditions | Assessed differently by each bank |
Personal loan | ❌ No | Cannot be accepted as own funds |
Important from a Hungarian perspective: if you want to use savings held in Hungary as own funds, the bank must verify the source of the money (under anti-money-laundering rules). It is advisable to gather bank statements and any property-sale documents in advance.
How does the bank assess repayment capacity?
The affordability rule (Tragbarkeit)
Swiss banks do not calculate affordability using the actual market interest rate, but rather with a theoretical calculation interest rate to determine whether you can truly afford the mortgage. This calculation rate was traditionally 5% and was set by industry self-regulation. In 2024, some banks and regulatory bodies reviewed this level, but the 5% reference rate is still widely used.
The affordability calculation formula:
Annual mortgage cost = (loan amount × 5%) + amortization + maintenance costs
The resulting annual amount must not exceed one-third of gross annual income (33%).
Example
For a property worth CHF 800 000, where the buyer provides CHF 160 000 in own funds (20%), the mortgage amount is CHF 640 000.
Theoretical interest (5%): CHF 32 000/year
Amortization (1%): CHF 6 400/year
Maintenance costs (approx. 1%): CHF 6 400/year
Total: approx. CHF 44 800/year
For this mortgage, the bank must see at least approx. CHF 134 400 gross annual income (44 800 × 3). This corresponds to a gross monthly income of about CHF 11 200.
This is the most common obstacle in Swiss mortgage applications. Property prices have risen significantly over the past decade, while incomes have not kept pace – which is why many applicants fail the affordability test, not the equity requirement.
Amortization: how long do you have to repay?
In Switzerland, a mortgage is not automatically amortized in full. The first mortgage (erste Hypothek) extends up to 65% of the purchase price – this does not have to be repaid. The portion between 65% and 80% is the so-called second mortgage (zweite Hypothek), which must be repaid by no later than within 15 years or by retirement age.
What documents does the bank request?
Swiss banks typically request the following documents during the application process. The list may vary from bank to bank and depending on the applicant’s status.
Personal documents:
Valid identity card or passport
Residence permit (Ausländerausweis) – its type and validity are critical (see below)
Residence certificate (Anmeldebestätigung) for the Swiss place of residence
Proof of income:
The last 3 months’ payslips (Lohnausweis)
The last 2–3 years’ tax returns (Steuererklärung) and tax assessment notices (Steuerveranlagung)
Employer’s confirmation (also requested for open-ended contracts)
For self-employed applicants: the last 2–3 years’ balance sheets and profit and loss statements
Financial situation:
Bank statements for the last 3–6 months
Second pillar (BVG) balance certificate from the pension fund
Third pillar (Säule 3a) balance, if relevant
Documentation of other assets (securities, real estate)
Documents relating to the property:
Preliminary purchase agreement or offer for the purchase price
Land register extract (Grundbuchauszug)
Building plans, energy certificate (for newer buildings)
Property valuation (carried out by the bank’s own appraiser)
From a Hungarian perspective: if you also have income, assets, or property in Hungary, these must be declared as well. Under the double taxation agreement (the treaty concluded between Hungary and Switzerland in 1981, as amended), the Swiss bank may take foreign income into account, but its assessment varies from bank to bank.
Under which residence permit can you apply for a mortgage?
The type of residence permit directly affects your chances of obtaining financing.
Permit type | Chance of obtaining a mortgage | Note |
|---|---|---|
C permit (Niederlassungsbewilligung) | ✅ Most favorable | Assessed the same as a Swiss citizen |
B permit (Ausländerausweis B) | ✅ Possible | Conditions vary by bank; a longer employment history is an advantage |
L permit (Kurzaufenthaltsbewilligung) | ⚠️ Difficult | Many banks reject it because of the short validity period |
G permit (Grenzgängerbewilligung) | ⚠️ Subject to conditions | Cross-border commuters; the property must be located in the region where you work |
No Swiss residence permit | ❌ Generally not possible | Lex Koller restrictions also apply |
Lex Koller: the 1983 federal law (Bundesgesetz über den Erwerb von Grundstücken durch Personen im Ausland, BewG) restricts property purchases in Switzerland by foreign nationals. Hungarian citizens who hold a residence permit in Switzerland and live there are generally exempt from Lex Koller and may buy residential property on terms similar to those for Swiss citizens. The restrictions are different when purchasing a holiday home or an investment property.
What does a mortgage cost? Interest, fees and ancillary costs
Interest rates (2024–2025)
Swiss mortgage rates depend on SNB interest-rate policy and capital market yields. In 2024, the SNB cut the policy rate in several steps, which also led to lower mortgage rates.
⚠️ I indicate the current specific interest-rate levels for verification in the INTERNAL NOTES block.
One-time ancillary costs
Item | Estimated amount |
|---|---|
Notary / land registry fee (Grundbuchgebühren) | 0.1–0.5% of the purchase price (varies by canton) |
Property transfer tax (Handänderungssteuer) | 0–3.3% (varies by canton; there is none in the canton of Zürich) |
Bank valuation fee | 500–2 000 CHF |
Mortgage registration fee (Grundpfandverschreibung) | 0.1–0.25% of the loan amount |
Legal / notarial involvement | CHF 1,000–5,000 |
Important: real estate transfer tax varies significantly from canton to canton. In the canton of Zürich, for example, there is no such tax, while in other cantons it can reach as much as 3% of the purchase price. For a property worth CHF 800,000, this can mean a difference of up to CHF 24,000.
Ongoing annual costs
Mortgage interest: depends on the loan amount and the interest period
Property tax (Liegenschaftssteuer): varies by canton; in some cantons it does not exist
Imputed rental value (Eigenmietwert): in Switzerland, owner-occupied residential property is subject to a taxable notional rental value – this increases the tax base, but mortgage interest can be deducted from it
Step by step: the mortgage application process
Preliminary financial assessment (3–6 months before purchase)
Calculate the available equity and the affordability threshold. Check the balance in the second pillar.
Bank pre-qualification (Hypothekarofferte / Voranfrage)
Request non-binding offers from several banks (Indikativofferte). This does not involve a credit assessment, but it gives you an overview of the conditions available.
Property selection and purchase price agreement
Before signing the preliminary purchase agreement, it is advisable to obtain the bank’s financing confirmation (Finanzierungszusage).
Submission of the formal mortgage application
Preparation and submission of the document package to the selected bank. The bank carries out its own valuation.
Credit assessment (Kreditprüfung)
The bank checks the equity, income, affordability and the property’s value. This typically takes 2–4 weeks.
Mortgage offer and contract (Hypothekarvertrag)
If the assessment is positive, the bank makes a written offer. Once the offer is accepted, the contract is signed.
Notarial deed and land register entry
In Switzerland, the property purchase takes place before a notary (Notar). Registration of the mortgage in the land register (Grundbuch) is a condition for disbursement.
Disbursement
The bank transfers the amount directly to the seller or to the notary’s escrow account.
Which Swiss bank is worth approaching?
In Switzerland, the mortgage market includes:
Cantonal banks (Kantonalbanken): there is at least one in every canton, operating with a state guarantee. They typically offer competitive terms and have excellent local real estate market knowledge. Examples: Zürcher Kantonalbank (ZKB), Berner Kantonalbank (BEKB).
Big banks: UBS, PostFinance. A broad product range, but more personalised service is more typical at cantonal banks.
Raiffeisen: a cooperative network with a strong presence in rural areas.
Insurers and pension funds: in some cases they also grant mortgages directly, typically with longer fixed-rate periods.
Online mortgage brokers: e.g. Moneypark, Hypomat – they compare offers from several banks at once.
Practical advice: do not request an offer from just one bank. The terms can differ by as much as 0.3–0.5 percentage points for the same credit profile, which over 20 years can mean a difference of tens of thousands of CHF.
What should you pay particular attention to as a Hungarian mortgage applicant?
1. The validity of the residence permit Renewal of the B permit is automatic, but if the bank sees a short validity period at the time of the application, it may ask questions. It is advisable to arrange the renewal before submitting the mortgage application.
2. Proof of foreign income and assets If you also have income in Hungary (e.g. from a rented-out property), it must be documented. A Swiss bank will not accept a verbal statement.
3. The tax implications of early withdrawal from the second pillar Early withdrawal of BVG capital (Vorbezug) is a taxable event in Switzerland, and the amount varies by canton. As a Hungarian citizen, this affects your Swiss tax liability, not your taxation in Hungary.
4. The return-home scenario If you return to Hungary in the future, selling or renting out the property raises complex tax-law and permit-related questions. It is worth understanding the mortgage termination conditions (Vorfälligkeitsentschädigung, i.e. early repayment fee) precisely before signing the contract.
5. Regional differences in the Swiss property market In the cantons of Zürich, Geneva and Zug, property prices are exceptionally high, and reaching the affordability threshold is more difficult. In smaller towns and rural cantons, the conditions may be more favourable.
Sources
Swiss federal portal (ch.ch): https://www.ch.ch/en/
Swiss Financial Market Supervisory Authority (FINMA, Eidgenössische Finanzmarktaufsicht): https://www.finma.ch
Swiss National Bank (SNB, Schweizerische Nationalbank): https://www.snb.ch
Federal Office for Land Registry and Civil Law (EÖBK): https://www.eöbk.admin.ch (⚠️ URL to be checked – the correct office name and URL require human verification)
Swiss Bankers Association (SBVg, Schweizerische Bankiervereinigung): https://www.swissbanking.org
Association of Cantonal Banks (VSKB): https://www.kantonalbank.ch (⚠️ URL to be checked)
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In Brief
In Switzerland, a mortgage can typically be obtained with at least 20% equity, of which at least 10% must come from liquid own funds. Instead of the actual interest rate, banks often assess affordability using a theoretical 5% rate, which is why many applicants fail not on the down payment, but on the affordability test.
Key Takeaways
- You must provide at least 20% equity, and at least 10% of that must be proven as liquid own funds.
- An amount withdrawn in advance from the second pillar can only cover the remaining part of the liquid quota, and it may also have tax implications.
- For the bank’s affordability calculation, the actual interest rate is often replaced by a theoretical 5% rate.
- The loan is considered realistic if the annual costs do not exceed 33% of gross annual income.
- The type of residence permit has a decisive impact on the assessment; a C permit is the most favourable, while applying without a Swiss residence permit is generally not possible.
- It is worth requesting offers from several banks, because even for the same credit profile there can be meaningful differences in conditions.
Frequently Asked Questions
How much equity is required for a Swiss mortgage?
Under Swiss rules, at least 20% of the purchase price must be covered from own funds. The bank finances up to 80% of the property value. Within this, at least 10% must come from liquid, so-called “hard” equity.
Does the bank accept the second pillar as equity?
Yes, but only to a limited extent. An amount withdrawn in advance from the second pillar can cover the remaining part of the liquid quota within the 20% equity requirement. At the same time, this may reduce future retirement benefits and can also create a tax liability.
How does the bank assess repayment capacity?
Banks do not calculate with the actual market interest rate, but often with a theoretical 5% rate. They then add amortisation and maintenance costs, and check whether the annual amount exceeds one-third of gross income. This affordability test is the main obstacle for many applicants.
Which residence permit makes it easier to obtain a loan?
A C permit is the most favourable, because banks generally assess it in the same way as Swiss citizens. A loan is also possible with a B permit, but the conditions vary from bank to bank. With an L or G permit, access to credit is more difficult, and without a Swiss residence permit it is generally not possible.
What documents does the bank request for a loan application?
Typically, the bank asks for an identity document, residence permit, proof of address, income statements, tax returns, bank statements and proof of assets. Property-related documents may include the preliminary purchase agreement, the land register extract and the bank valuation. The exact list may vary by bank.
How much can ancillary costs amount to in Switzerland?
Notary and land register fees, property transfer tax, the bank valuation and the mortgage registration fee can add significant extra costs. Property transfer tax varies especially strongly by canton: in Zürich, for example, there is no such tax, while in other cantons it can reach several percent of the purchase price. For this reason, the total purchase cost must be planned on a canton-specific basis.
Why is it worth requesting offers from several banks?
Because even for the same credit profile, the conditions can differ significantly. According to the article, a difference of 0.3–0.5 percentage points can occur, which over a longer term can mean tens of thousands of francs. Comparing multiple offers is therefore financially justified.
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