Swiss Mortgages 2026: Affordability, Loan-to-Value & Interest Explained

You want to buy. But nobody explains the numbers.

You've spotted a lovely house or flat online. CHF 950'000. Looks doable. You go to the bank, and suddenly terms are flying at you: loan-to-value (Belehnung), affordability (Tragbarkeit), calculated interest rate, amortisation, SARON.

You nod politely. And walk out without really understanding whether you can afford it or not.

This happens to a lot of people. And it's not your fault – banks (and honestly many property professionals too) love speaking in jargon. Yet the three key numbers behind a Swiss mortgage are actually surprisingly simple.

In this article I'll clear it up. After these 11 minutes, you'll know how a Swiss mortgage actually works, whether the property you have in mind is affordable for you, and which type of mortgage makes sense in 2026.

The three numbers that decide everything

Every Swiss mortgage revolves around three concepts. Understand these and you've understood 90% of it.

Loan-to-value (Belehnung) – how much money the bank will lend you at all.
Affordability (Tragbarkeit) – whether you can cover the ongoing costs.
Amortisation – how much you must repay each year.

Let's look at each one.

Loan-to-value: how much will the bank lend you?

In Switzerland, banks will finance a maximum of 80% of the purchase price. You must bring the remaining 20% as equity.

On a property for CHF 950'000, that means:

Item	Amount
Purchase price	CHF 950'000
Mortgage (max. 80%)	CHF 760'000
Equity (min. 20%)	CHF 190'000

But not all equity is treated equally.

Hard vs. soft equity

Hard equity (at least 10% of the purchase price): money in a savings account, securities, inherited wealth, cash. You must genuinely have this available.
Soft equity (the other 10%): you may withdraw or pledge funds from your Pensionskasse (occupational pension), and you may use Pillar 3a savings.

On a CHF 950'000 property, you need at least CHF 95'000 in real money plus CHF 95'000 from Pensionskasse/Pillar 3a (or more real money). Pure Pensionskasse money as the entire equity contribution is not permitted.

Tip: A Pensionskasse early withdrawal reduces your future pension and is taxed as a capital payment when drawn. Pledging (Verpfändung) is often the smarter move: you "pledge" the Pensionskasse assets as security without actually withdrawing them. Your pension stays intact, but the bank still counts the money as collateral.

The 65% mark: first and second mortgage

The mortgage is split into two parts:

First mortgage (up to 65% loan-to-value): does not need to be repaid – you can theoretically keep it in place indefinitely.
Second mortgage (from 65% to 80%): must be repaid down to 65% loan-to-value within 15 years or by retirement, whichever is sooner.

In our example (CHF 760'000 mortgage on a CHF 950'000 property):

65% of CHF 950'000 = CHF 617'500 → first mortgage
CHF 760'000 − CHF 617'500 = CHF 142'500 → second mortgage, must be repaid within 15 years

That's CHF 9'500 per year in amortisation. We'll need that number again shortly.

Affordability: the most important number of all

This is where it gets serious – because most mortgage applications fail on affordability.

The rule of thumb: your annual housing costs must not exceed 33% of your gross annual income. This applies regardless of whether current interest rates are high or low, because the bank calculates using a fixed calculated interest rate of 5%.

Yes, 5%. Even if you can get a fixed mortgage today at 1.8%. The bank wants to see that you could still manage if interest rates rose again.

How the bank calculates

Three components make up your annual housing costs:

Calculated interest rate (5% of the mortgage)
Ancillary costs and maintenance (1% of property value)
Amortisation (on the portion above 65% loan-to-value)

For our example:

Item	Calculation	Per year
Calculated interest	5% × CHF 760'000	CHF 38'000
Ancillary costs	1% × CHF 950'000	CHF 9'500
Amortisation	CHF 142'500 ÷ 15 years	CHF 9'500
Total housing costs		CHF 57'000

For this to be ≤ 33% of your gross income, you need:

CHF 57'000 ÷ 0.33 = CHF 172'727 gross annual income.

Or in other words: roughly CHF 14'400 gross per month as a household income. For a couple with two full salaries, challenging but achievable. For a single person, quite demanding.

What if I'm close to the limit?

Three levers:

More equity (e.g. from parents, inheritance, longer saving) → smaller mortgage → lower calculated interest burden.
Cheaper property → lower ancillary costs and mortgage.
Include a co-borrower officially → both incomes count.

What won't help: trying to negotiate the 33% rule with the bank. It's anchored in regulation (FINMA guidelines). A few banks have flexibility in exceptional cases, but don't count on it.

Fixed mortgage vs. SARON: what makes sense in 2026

You've got the mortgage. Now the next question: which type?

In Switzerland today, there are essentially two relevant models:

Fixed mortgage (Festhypothek)

You lock in the interest rate for a fixed term (typically 2–10 years, sometimes 15). During this period, your payments stay constant. Safe and predictable, but you're effectively betting that the rate you chose is fair for the duration.

Pro: Planning certainty. You know to the franc exactly what the next 5 or 10 years will cost. Con: If rates fall during the term, you miss out. Early termination typically costs five figures.

SARON mortgage (variable/money market)

The interest rate adjusts quarterly based on the SARON benchmark (Swiss Average Rate Overnight) plus a fixed bank margin. If rates fall, you benefit. If they rise, you pay more.

Pro: Historically cheaper than fixed mortgages over long periods. Maximum flexibility. Con: You have to tolerate fluctuations. If the Swiss National Bank (SNB) raises rates, you'll feel it in your account the following quarter.

Which should I choose?

Honest answer: nobody knows how rates will move. The SNB started cutting rates in 2024, and SARON has come down considerably. Anyone who locked in a 10-year fixed mortgage at 2.8% in 2022 is regretting it today. Anyone on a variable SARON rate is benefiting. But someone who fixes at today's low rates for the long term might be the smart one in five years.

A pragmatic strategy: split it. For example, 60% in a 7-year fixed mortgage (for planning certainty) and 40% on SARON (to benefit from low rates). That way you're not fully committed to a single bet.

Important: never put everything into a single fixed mortgage with the same term. You'd face full refinancing in 10 years at an unknown rate. Better to stagger: one tranche renewing in 3 years, one in 6, one in 9. That spreads the interest rate risk.

Shopping around pays off properly

Mortgage rates in Switzerland vary between banks by up to 0.5 percentage points for the same profile. That sounds small, but on a mortgage of CHF 760'000, 0.5% per year is CHF 3'800. Over 10 years: CHF 38'000. That's a new car.

Options for comparing:

Comparis mortgage comparison – good overview of current rates.
MoneyPark and Hypoplus – independent mortgage brokers. They collect offers from 100+ banks and pension funds, and you pay nothing (they earn a commission from the bank).
Get at least three quotes personally: your main bank, a second bank of your choice, and a pension fund (e.g. AXA, Swiss Life, or your employer's pension fund if it offers mortgages).

Negotiating is normal: banks expect you to negotiate. Show them the best competing offer and ask whether they can improve. You'll often get 0.1–0.2 percentage points shaved off without much effort.

My practical tip: the affordability check before you click on listings

Before you fall in love with a property, do this calculation in your head:

Take your gross household income per year.
Multiply by 0.33 → that's your maximum annual housing costs.
Subtract 1% of the expected purchase price (ancillary costs/maintenance).
What's left is your budget for calculated interest + amortisation.
Divide by 5% → that gives you roughly the maximum mortgage you can get.
Add 20% equity to get your maximum purchase price.

Example: your household earns CHF 180'000 gross.

Max. housing costs: CHF 59'400 / year
Minus 1% ancillary costs (estimated at CHF 1M property): −CHF 10'000 → CHF 49'400
Divided by 5% = maximum mortgage of approx. CHF 988'000
Plus 20% equity = maximum purchase price of approx. CHF 1'235'000

In 30 seconds you know whether a listing is in your range. Saves you endless viewings of properties you can't afford.

You can work through the exact figures for your income, equity situation, and target purchase price in the Mortgage Calculator. It shows not just affordability, but the monthly costs and equity requirements down to the franc.

Common mistakes that get expensive

Mistake 1: Calculating based on today's low rates. The 5% calculated rate rule is non-negotiable. What you actually pay today (e.g. 1.8%) is not what the bank uses to assess affordability.

Mistake 2: Draining your Pensionskasse. Convenient for affordability now, but it reduces your pension for life and you'll pay capital gains tax on the withdrawal. Pledging is usually the smarter option.

Mistake 3: Putting everything into one single fixed mortgage. Refinancing risk is real. Stagger your tranches.

Mistake 4: Getting only one quote. Anyone who doesn't compare pays more. Full stop.

Mistake 5: Underestimating ancillary costs. Heating, electricity, water, building insurance, maintenance reserves, unexpected repairs. The bank's 1% flat rate is a minimum. Realistically plan for 1.2–1.5%, especially for older properties.

Your next step

Whether you have a specific property in mind or are just starting to think about home ownership, do these three things in exactly this order:

Calculate affordability – using the Mortgage Calculator. Before you look at listings.
Make an equity plan – how much do you actually have? What comes from Pillar 3a, what from your Pensionskasse (pledge or withdraw?), what do you still need to save?
Get three quotes – your main bank + a second bank + a broker like MoneyPark or Hypoplus.

Buying property in Switzerland means tying yourself to a contract with a bank for 10, 20, 30 years. That's a big commitment. But once you understand the three numbers – loan-to-value, affordability, and amortisation – you're no longer flying blind. You know what you're agreeing to, and you can ask the right questions.

And that's the difference between "I hope this works out" and "I know exactly what I'm doing".