Budget
How much purchase price is realistic without overstretching you in the long term?
First home
Prepare your first home properly.
For many, the first purchase is a big step. Before you sign a reservation, you should understand how budget, equity, affordability, mortgage, pension funds and documents fit together.
Equity
How much money of your own do you have and how much of it is not from the pension fund?
Affordability
Do interest, maintenance, ancillary costs and amortisation fit your income?
Property
How does the bank assess the house or the flat?
Documents
Which documents does the bank need so it can review?
20%
Understand equity
For an owner-occupied home, banks generally finance no more than around 80 % of the lending value they recognise. If the purchase price and lending value are the same, you therefore usually need at least 20 % equity. If the bank values the property below the purchase price, you must also finance this difference with your own funds.
Banks review individually.10%
Own funds excluding pension fund
As an orientation, at least around 10 % of the lending value must come from funds that are not from the 2nd pillar. Examples are a savings account, securities, pillar 3a, a gift or an advance on inheritance.
The bank reviews the origin and eligibility.Remaining equity
The second part can, depending on the situation, come from the pension fund. Instead you can also use more of your own savings, securities, pillar 3a, a gift or an advance on inheritance.
The pension fund is possible, but not mandatory.Example: purchase price CHF 1’000’000
The following illustration is a simplified orientation and not a commitment.
If the bank values the property lower than the purchase price, additional equity may be needed. The difference often has to be covered with your own funds.
Affordability
The bank does not only look at today’s interest rate. It often reviews with an imputed interest rate, maintenance and ancillary costs as well as amortisation whether the burden fits the income in the long term.
Purchase price vs. lending value
The price in the listing is not automatically the value the bank calculates with. The lending value influences how high the mortgage can be.
Prepare documents
ID, salary documents, tax documents, debt collection extract, proof of equity, pension fund statement, 3a statement and property documents are important.
Why purchase price and lending value can diverge
The bank’s loan-to-value value
The purchase price is the amount you agree with the seller. The loan-to-value value, by contrast, is the cautious valuation the bank relies on for its financing.
For this it assesses, among other things, location, building condition, renovation needs, comparable properties, resaleability as well as entries in the land register. A high asking price does not oblige the bank to recognise the same value.
The decisive consequence
The possible mortgage is, in principle, calculated on the lower value accepted by the bank. You must therefore be able to additionally cover a difference to the purchase price with your own funds.
Example with a lower lending value
Agreed purchase priceCHF 1’000’000
Value recognised by the bankCHF 950’000
80 % of CHF 950’000CHF 760’000
Equity for the purchase priceCHF 240’000
In the example the bank finances at most CHF 760’000. That leaves CHF 240’000 of the purchase price. That is CHF 40’000 more than with a simple 80/20 calculation on the purchase price.
Use pension funds deliberately
Advance withdrawal
Capital from the pension fund or pillar 3a is paid out and used as equity. This reduces the pension assets. The payout is taxed separately; this tax requires additional liquidity and must not be thought of as financed from the withdrawn pension amount.
Depending on the pension solution, retirement benefits as well as benefits in the event of disability or death may also be affected.
Pledging
The pension capital remains in principle, but serves the bank as security. Initially no capital payout tax arises. In return the mortgage can stay higher, and in the event of realisation the bank can access the pledged claims.
Which option fits depends on income, family, taxes, retirement and risk capacity.
Preparation
Which documents the bank would like to see
Personal documents
- ID and civil status
- Salary and income proof
- Tax return and assessment
- Debt collection extract
- Overview of current obligations
Equity
- Account and securities statements
- Pillar 3a proof
- Pension fund statement
- Document a gift or advance on inheritance
- Plan for incidental purchase costs and reserve
Property check
- Land register extract and plans
- Building condition and renovations
- For condominium ownership: minutes and funds
- Insurance and ancillary costs
- Reservation only after the financing review
Typical mistakes: reserving too early, keeping too little reserve, calculating only with the current interest rate, using the pension fund without a pension review or checking the property too little.
Free template
Free: Swiss household budget template
Before you discuss affordability and financing with a bank, a realistic budget overview helps. Enter your income and expenses – the template automatically adds up monthly and yearly figures as well as your balance.
- Income, expenses and reserves fully structured
- Calculates monthly and annual figures plus your balance automatically
- Extra overview sheet across all expense categories
Taxes
Understand taxes
Property taxes explained clearly.
Imputed rental value with the reform from 2029, debt interest, maintenance, rental income and property gains tax – explained for orientation, not tax advice.
Are you assessing a specific property?
First use the calculators and then describe which questions about the purchase, the financing or the documents are still open. We sort them out with you to prepare the best decision.