Switzerland consists of many Cantons, which all have their own individual laws and policies when it comes to purchasing property. International buyers are permitted to obtain a license from the appropriate cantonal and federal authorities.
A full range of mortgages are available for Swiss property purchases and rates are highly competitive.
The minimum deposit usually required for a property purchase in Switzerland is 20%, 10% of this must be cash, the other 10% can be funded through other means including a pension that will be used as collateral, however only assets in Switzerland can be used as collateral, so you could use a Swiss pension but not a pension from another nation.
The current options available may not be as flexible as in the UK, interest only mortgages and 100% mortgages are very rare in Switzerland and extending a mortgage to cover renovation work is uncommon. Fixed rates for mortgages in Switzerland start as low as 1.2%.
Non-resident foreigners can also purchase property, subject to federal law. Any mortgage must not exceed 80% of a property mortgage valuation or purchase price (whichever is lower). The usual terms are from 5 to 30 years up to the age of 70.
How Much Can I Borrow?
There are two main criteria for determining how much you can borrow: the value of your Swiss property and your financial situation. Lenders in Switzerland will require that your monthly income is at least three times the amount required to repay the loan, included in this will often be maintenance or insurance charges, raising the monthly income required.
Most Swiss lenders take into account your existing liabilities, including mortgage/rent payments, personal and bank loans, and maintenance payments. When these are added to your proposed Swiss mortgage payments, the total must not exceed 30% of your gross income (33% of net income). These percentages can vary.
Proof of income is required in all cases. This can be made up of earned income, pension, investment, or rental income. However, not all lenders take all of these into account when determining how much you can borrow.
Swiss mortgages are generally split between two mortgages, one with an indefinite repayment period and the other which must be repaid relatively quickly. The indefinite mortgage covers 60% of the purchase price while the other mortgage covers the remainder between this value and the total mortgage value which covers the 20% of the purchase price, this will typically need to be repaid within 15 years or by your retirement age.
If you a non-resident foreigner you should expect to have to provide a significant amount of information when applying for a mortgage.
2. Licence to purchase
3. Proof of income
4. Tax return
5. Extract from the Swiss land registry
6. Property description
7. Insurance certificate
8. Notary details
Property Transaction Fees
The fees applicable will vary depending on which Canton your purchase property within, but generally consist of the following:
1. Notary fees
2. Property transfer tax
3. Land registrations fee
4. Mortgage registration fees
Please contact us about our Swiss mortgage advisors for further information.
Contact Mark Warner Property