There are two main financial challenges when buying a house in Switzerland
If you want to buy property in Switzerland, you will face two main challenges:
- Down payment: This is the portion of the purchase price that you pay out of your own pocket. It must amount to at least 20% of the purchase price.
- Affordability of the mortgage: Monthly expenses from mortgage interest, amortisation payments, and the maintenance costs of your property must not exceed a certain percentage of your household income, usually around ⅓.
What salary do you need to buy a house in Switzerland
|
Purchase price |
Down payment |
Yearly income |
|
500'000 |
100'000 |
77'000 |
|
1'000'000 |
200'000 |
154'000 |
|
1'500'000 |
300'000 |
230'000 |
|
2'000'000 |
400'000 |
307'000 |
|
2'500'000 |
500'000 |
384'000 |
|
3'000'0000 |
600'000 |
460'000 |
Ongoing costs
A mortgage is considered affordable if the property's ongoing costs do not exceed approximately one-third of your gross income. These ongoing costs include:
- Imputed mortgage interest: The interest rate is set to 5 %, which is higher than actual mortgage rates, ensuring affordability should mortgage rates rise.
- Amortisation Payments: The so-called second mortgage (the portion exceeding ⅔ of the property value) must be redeemed within 15 years, or upon reaching retirement age, whichever is first.
- Incidental Costs: This includes heating and electricity, as well as maintenance work on the property. Most financial institutions estimate these at 1% of the property value or purchase price.
Reducing your required income
If your income is not quite enough to become a homeowner in Switzerland, you have several options available:
- Larger down payment: Paying a bigger portion of the purchase price upfront means a smaller mortgage loan, lowering monthly payments.
- Inquire with different financial institutions: Affordability criteria are approximate guidelines, and there are significant differences between lenders. Some lenders may allow ongoing costs to reach up to 38% of your income, while others cap it at 33%. Additionally, lenders may either consider your gross income or net income. The imputed interest rate will also vary depending on the bank or insurance, as will the maintenance costs, which may sometimes also depend on the age of the property.
- Seek financial advice: Submitting a comprehensive file increases your chances of getting your mortgage approved. A financial advisor will negotiate on your behalf with various lenders for the best mortgage rates and terms. They will also provide individual advice on long-term financial strategy and review the fine print and legal details of the mortgage agreement and defend your interests during negotiations.
