Acquiring one's primary residence is a significant step, symbolizing stability and investment in the future. However, this process requires rigorous preparation, particularly regarding financing.

Understanding Financing Requirements in Switzerland

Personal Contribution: A Minimum of 20%

In Switzerland, acquiring a property generally requires a personal contribution of at least 20% of the purchase price. For example, for a house costing CHF 1,000,000, a contribution of CHF 200,000 is necessary.

Composition of Own Funds

Own funds can come from various sources: 

• Personal Savings: current or savings accounts.

  
  

• Investments: securities or other liquid assets.

  
  

• Retirement Savings: 3rd pillar assets and, under conditions, 2nd pillar assets.

  
  

• Family Assistance: inheritance advances or donations.

  
  

It is important to note that, generally, at least 10% of the purchase price must come from "hard" own funds, meaning not from professional retirement savings.

Assessing Financial Capacity

Monthly Expenses to Consider

Swiss financial institutions estimate that housing costs should not exceed one third of gross annual income. These costs include:

• Mortgage Interest: calculated on a reference rate of 5%.

  
  

• Amortization: repayment of the borrowed capital.

  
  

• Maintenance Costs: estimated at around 1% of the property's value per year.

  
  

Concrete Example:

For a property worth CHF 1,000,000, with mortgage financing of CHF 800,000, annual charges could amount to approximately CHF 46,400. Thus, a gross annual income of at least CHF 180,000 would be recommended to maintain a healthy financial balance.

Choosing the Right Type of Mortgage

Fixed-Rate Mortgage

The interest rate remains constant throughout the duration of the contract, providing predictability in costs.

Variable-Rate Mortgage

The interest rate can fluctuate based on the market, which can be advantageous during periods of falling rates but also carries risks if rates rise.

SARON Mortgage

Based on the daily rate of the Swiss money market, it offers an alternative to traditional mortgages, usually with lower but more volatile rates.

Anticipating Additional Costs

In addition to the purchase price, other costs must be taken into account:

• Notary and Registration Fees: varying by canton, these can represent between 3% and 5% of the purchase price.

  
  

• Bank Processing Fees: related to setting up the mortgage.

  
  

• Insurances: building insurance, life insurance related to the mortgage, etc.

  
  

Conclusion

Purchasing a primary residence in Switzerland is an ambitious project requiring meticulous preparation. By understanding financing requirements, accurately assessing financial capacity, and anticipating additional costs, it is possible to lay a solid foundation for a successful investment.