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In Switzerland, lending institutions require a strict balance between personal contribution and debt capacity, two pillars that determine access to mortgage credit. To finance a real estate property, you must therefore find the right loan structure, mobilise the right pillars, and know how to negotiate conditions that are viable in the long term.


  • Banks apply two fundamental rules: own funds and financial capacity.
  • The pension mechanisms (2nd and 3rd pillars) can strengthen your personal contribution.
  • The choice of the type of mortgage influences the flexibility and the overall cost of the financing.

Step 1: Knowing the pillars of financing

When making your pledge-right request to the bank, it evaluates your file on the basis of strict criteria. Two rules dominate: that of own funds and that of financial capacity.

The rule of own funds

To obtain a mortgage, at least 20% of the purchase price of the property must be covered by own funds. This threshold constitutes the basis of any banking negotiation. However, the regulation distinguishes the origin of these funds:


  • At least 10% must come from personal savings, without using occupational pension assets (excluding the 2nd pillar).
  • The rest can be completed by different sources: classical savings, 3rd pillar A, advance on inheritance, donation, or even withdrawal or pledging of the 2nd pillar (BVG).

In addition, the bank expects you to be financially involved in the acquisition in order to reduce the risk of payment default.

The affordability test (or rule of the third)

The rule of the third stipulates that the total annual cost of your housing must not exceed one third (33%) of your gross annual household income.


To apply this rule, the bank does not base itself on your current costs (which may be low if rates are low), but on a hypothetical and secure calculation. Thus, the annual costs include:

  • Mortgage interest: calculated at a normative rate of around 5%, independently of the actual market rate.
  • Amortisation: progressive reduction of the debt to reach 66% of the property value within a period of 15 years.
  • Maintenance costs: estimated between 0.7% and 1% of the property value per year.

If your costs exceed this threshold, the financing is generally refused. This prudence protects you from excessive debt, notably in case of future increases in interest rates.


Step 2: Optimising own funds

In Switzerland, you have the possibility to mobilise part of your pension capital to complete your own funds. This option nevertheless requires careful analysis, as it directly affects your future retirement.

Use of the 2nd pillar (BVG)

Two solutions are possible:


  • The early withdrawal: the capital is paid to you directly to finance part of the property. If this solution consequently reduces the amount of the mortgage, it leads to a reduction of retirement benefits and immediate taxation of the withdrawn amount.
  • The pledging: the capital remains in your pension fund but serves as a guarantee to the bank in case of payment default. If this option has the advantage of preserving your pension and avoiding taxation, it does not increase your immediate purchasing capacity.

Of course, the choice between these two options depends on your professional situation, your investment horizon, and also your risk tolerance.

The role of the 3rd pillar A (tied pension provision)

The 3rd pillar A constitutes another flexible and fiscally advantageous lever. The saved amounts can be used to strengthen your own funds at the time of the purchase or to amortise the mortgage.


Moreover, the payments made each year are deductible from taxable income, which reduces the fiscal burden while preparing a real estate project.

Other possible sources

Banks also accept other forms of capital:


  • classical savings,
  • buyback of life insurance,
  • family help or advances on inheritance.

Attention: the origin of the funds must always be clearly documented to comply with banking transparency rules.


Step 3: Structuring the mortgage loan

Once the own funds are gathered, the structure of your loan determines the balance between security and financing cost.

The main loan (1st-ranking mortgage)

Note that the main loan can cover up to 66% of the value of the property. This portion benefits from the lowest interest rates because it represents the least risk for the bank. No amortisation obligation is imposed on this portion.

The complementary loan (2nd-ranking mortgage)

This second mortgage finances the portion between 66% and 80% of the price of the property. It must be reimbursed over a maximum period of 15 years, or before retirement age.


This progressive reimbursement, called amortisation, reduces the total debt and strengthens the financial security of the household.

The amortisation methods

Two approaches are possible:


  • Direct amortisation: regular payments immediately reduce the capital owed and the interest but also reduce tax deductions.
  • Indirect amortisation: the amounts are paid into a pledged 3rd pillar A account. The mortgage remains unchanged until the withdrawal of the pillar, which allows maintaining the deduction of mortgage interest while building up savings.

Step 4: Choosing the type of mortgage

To finance a property in Switzerland, you have the possibility to choose between several mortgage formulas.

Fixed-rate mortgage

Its main advantage lies in stability: the rate remains identical throughout the entire duration of the contract (often 2 to 10 years). Thus, the amount of your instalments is perfectly predictable, and you are protected against any rate increase.


However, this security has a cost: fixed rates are often slightly higher, and any early exit may entail high penalties.

Variable-rate mortgage

Without a fixed duration, the variable mortgage adjusts itself according to the money market.


If it offers great flexibility, particularly for borrowers who plan a sale or renegotiation in the short term, it nevertheless exposes to strong volatility due to rate variations.

Money-market mortgage (SARON)

Indexed to the SARON (Swiss Average Rate Overnight), this modern form of mortgage closely reflects the real evolution of the market. As such, the rate of this mortgage is composed of the SARON index plus a banking margin.


It combines transparency and adaptability but requires good tolerance to fluctuations because revisions are frequent (every 3 or 6 months).


Step 5: Negotiating ancillary costs

Beyond the loan, it is important to anticipate the costs and to compare the offers carefully.

The role of the mortgage broker

As you probably already know, using a real estate broker can allow you to access a wide range of financial institutions (banks, insurers, pension funds).


Thanks to his on-the-ground experience, this professional compares the rates, negotiates the margins, and advises on the most advantageous structure. He can also assist you in preparing the financing file.

H3: Acquisition costs (ancillary costs)

In Switzerland, the purchase of a property entails unavoidable ancillary costs:


  • Transfer duties,
  • Notary fees,
  • Land register fees.

Depending on the canton, these costs represent between 3% and 5% of the price of the property. They must imperatively be financed with own funds because banks do not include them in the mortgage.


Do you wish to become a homeowner? Our financial capacity calculator can help you! dreamo.ch offers, on all properties for sale, a financial capacity calculator accessible by clicking on the "Financing" button on the page of the property you are interested in.