Purchase fundamentals
Swiss real estate purchase rests on three pillars:
- Down payment: 20% minimum of purchase price, of which 10% in hard equity (excluding pillar 2)
- Mortgage: 80% maximum of price, split into 1st and 2nd mortgages
- Amortisation: the 2nd mortgage (15 to 20% of price) must be repaid in 15 years
The affordability rule adds: your charges (theoretical mortgage interest at 5%, amortisation, ancillary costs) must not exceed 33% of your gross income. This is often the main brake.
Example: for a CHF 800,000 property, plan for CHF 160,000 down and gross annual income of at least CHF 130,000 to 150,000.
Building the down payment
The down payment can combine several sources:
- Personal savings: current account, savings, ETFs
- Pillar 3a (locked assets): early withdrawal for primary residence
- Pillar 2 (BVG): early withdrawal or pledging for primary residence only
- Family gift: possible, declared per each canton's rules
- Sale of a previous property: proceeds after mortgage repayment
Warning: pillar 2 withdrawal reduces your future pension and can affect your disability/death coverage. Evaluate with an independent advisor.
Mortgage: fixed rate vs Saron
Two main mortgage types:
- Fixed-rate mortgage: rate guaranteed for 2, 5, 10 or 15 years. Secures payments but prevents benefiting from rate cuts
- Saron mortgage: variable rate indexed on Saron (Swiss interbank reference) + margin. More flexible and often cheaper, but sensitive to fluctuations
The most common strategy: multiple tranches (e.g., 50% on 10-year fixed, 50% on Saron) to diversify risk. Always compare 3 to 5 banks and an independent broker (Hypotheka, MoneyPark): half a point difference means tens of thousands of francs over 10 years.
Lex Koller for foreigners
Lex Koller restricts Swiss real estate purchase by non-Swiss non-residents:
- B and C permits: free purchase of primary and secondary residences (limitations in some cantons)
- L, G permits: restrictions, generally primary residence only after authorisation
- Without permit or non-resident: purchase subject to cantonal authorisation, refused by default except special cases
- EU/EFTA nationals working in Switzerland: treated like Swiss for primary residence
Consult a notary before any purchase if your status is non-standard. The transaction will be blocked without valid authorisation.
Property taxation
Being an owner in Switzerland implies several tax effects:
- Imputed rental value: a theoretical income (60 to 80% of equivalent market rent) added to your taxable income
- Mortgage interest deduction: fully deductible from income
- Maintenance deduction: choice between flat rate (10-20% of imputed value) or documented actual costs
- Cantonal property tax: 0.5 to 3‰ of fiscal value, by canton
- Capital gains tax: on resale, rate degressive by holding period (very high < 5 years, reduced > 20 years)
A cantonal tax simulator (VaudTax, ZHprivate) allows estimating real impact before purchase.
Additional costs to anticipate
The purchase is not limited to the listed price. Add:
- Transfer duties: 1 to 3% of price by canton
- Notary fees: 0.1 to 1.5% by canton and complexity
- Land registry fees: 0.1 to 0.3%
- Bank fees: 0.1 to 0.3% for mortgage setup
- Property appraisal: CHF 800 to 3,000 if required by the bank
- Moving and works: highly variable
Recommended overall provision: 5 to 7% of purchase price on top of the down payment.
Pitfalls to avoid
Common mistakes:
- Buying at cycle peak without margin for decline
- Overestimating capacity: 33% affordability is a minimum, aiming for 30% is healthier
- Choosing a single lender without comparing
- Underestimating charges: condo fees, maintenance, renovation fund (1% of price/year)
- Neglecting the PPE: for condo apartments, read the regulations and accounts carefully
- Buying remotely: visit on site, at different times, weekday and weekend
Buying is a 20-30 year commitment. Better to rent 3 more years to buy under good conditions than rush.
