For most people a mortgage is the largest loan of their life – and the Swiss rules are distinctive. Understanding the terms lets you compare offers better and avoid nasty surprises. This guide explains the essentials, without replacing personalised financial advice.
For the affordability test, banks do not calculate with today’s often-low rate but with a much higher imputed rate (frequently around 5%). This ensures you could still afford the home if rates rise. It explains why a property must be “affordable” even when the current instalment would be far lower.
The first mortgage reaches up to about two thirds of the property value. The portion above that up to 80% is the second mortgage and must be amortized within 15 years or by retirement. With direct amortization you repay the debt directly; with indirect amortization you pay into pillar 3a, which later reduces the mortgage – this can have tax advantages.
A fixed-rate mortgage locks the rate for a set term – planning security but less flexibility. A SARON mortgage follows the short-term reference rate and fluctuates accordingly – often cheaper, but with interest-rate risk. Some borrowers combine both (“tranches”) to balance risk and flexibility.
For owner-occupied property you can use pension capital. With a withdrawal you take capital from the 2nd or 3rd pillar – this raises your equity but reduces your future pension and can trigger a tax. With a pledge, the capital stays invested and only serves as security; the mortgage is larger, but your pension stays intact. Which option fits depends on your situation.
Even renters benefit from understanding interest: rents are tied to an official reference interest rate. When it falls, tenants may be able to request a rent reduction; when it rises, increases are possible. It pays to know the current level.
Numbers are one half of the decision, location the other. Before investing time in viewings, explore a property’s surroundings, orientation and neighbourhood on the 3DFlats 3D map – so your financing conversations focus on the properties that genuinely qualify.
This guide offers general orientation. Rules, deadlines, fees and taxes differ by canton and municipality and change over time. Before making binding decisions, check the official sources for your canton and, where needed, consult professionals (fiduciary, bank, notary, tenants’ association).
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