Buying a House in Switzerland – What You Need to Know

Switzerland’s real estate market has unique rules. It’s different from other countries, especially for expats and those with residence permits.

Can Expats Buy Property in Switzerland?

Not all expats can buy residential property in Switzerland. The market is regulated, and non-Swiss nationals face restrictions.

B Residence Permit: You can buy property only if you will live in it.
C Residence Permit: You can buy both homes to live in and properties to rent out.

Without a B or C permit, only a limited number of vacation properties can be bought by people living abroad. These rules help keep the real estate market stable.

Is It Possible to Get a Mortgage from a Swiss Bank?

If you can buy a property with your residence permit, the next step is to see if a Swiss bank will give you a mortgage. They will check if you can afford the property long-term.

Affordability and Loan-to-Value

Affordability: Banks ensure your yearly housing costs (mortgage interest, repayments, and other costs) don’t exceed one-third of your gross income. They use a 5.00% interest rate to check this, even if current rates are lower.
Loan-to-Value: Banks usually offer up to 80% of the property value as a loan. You need to cover at least 20% with your own money.

Own Funds Composition

You need at least 20% of the purchase price as equity. At least half of this must be from savings or other non-pension sources. The rest can come from pension funds.

Mortgages Types

Fixed-Rate Mortgage: The interest rate and monthly payments are fixed for a term (2-10 years). It offers stability but less flexibility.
SARON Mortgage: The interest rate varies based on the market rate. It can be cheaper if rates go down but riskier if they go up.

Amortising Mortgages in Switzerland

You only need to pay off your mortgage to 65% of the property’s value until retirement. This can provide tax benefits as mortgage interest is tax-deductible.

Property Prices and Market Trends

Property prices in Switzerland are high due to strong demand and limited supply. The market is stable and real estate is seen as a safe investment.

Understanding the Swiss Home Buying Process

Switzerland’s real estate market has many unique features. From strict buying rules to specific mortgage options, it’s important to understand these aspects to navigate the market successfully.