Mortgages in Switzerland

Switzerland has a significant foreign population, with around four in every ten residents hailing from other countries. Switzerland’s international bodies, private banks, the financial ecosystem (including Zug’s crypto valley and increasingly, Swiss FinTech players) and pharmaceutical firms all draw their fair share of international employees. Many Swiss residents buy in larger towns, cities and on Switzerland’s lakefronts. Switzerland’s fiscal regime, privacy, security, education, hospitality and leisure offerings also draw high-net-worth individuals to live in the country.

Switzerland also continues to draw healthy demand from international and non-resident buyers. Holiday homes – mainly mountain residences in top ski resorts – are especially sought-after.

As you’d expect, Switzerland has an abundant stock of luxury property. Villas and property on Switzerland’s largest lakes can typically cost upwards of five million francs, with ultra-prime or large property costing more. Lakefront properties with large plots of land are a little rarer (many lakefront properties sit close to roads) and are regularly listed at prices of more than 15 million francs, with some requiring major renovation work in addition to the purchase price. Properties set back a few kilometres from Switzerland’s lakes often offer wonderful views and can be more secluded. While these properties may be slightly less expensive than lakefront homes, they will still command a hefty price tag.

In Switzerland’s largest towns and cities, prime property will range in price significantly. City-centre flats can be luxurious, especially in renovated apartments in old buildings that retain historical features.

Average apartment prices are around CHF 750,000 in Switzerland, although luxury, city-centre flats will cost more. A relatively small flat can cost more than CHF 1 million in some areas, as do new-builds or larger apartments. Average house prices in Switzerland amount to CHF 1.1 million, but houses in Switzerland’s main cities are generally more expensive – especially at the top end of the market. Homes in the outskirts of larger towns of cities that offer lakefront access cost several million francs. These homes offer privacy, stunning views, access to the water and easy connections to urban areas, mountain resorts and often, great airport connections via Switzerland's rail links.

Mountain chalets and real estate in Swiss tourist resorts are in demand from both domestic and international visitors. Prices will depend on the size of the property, its location in the resort and the overall popularity of the area. Large chalets in some of Switzerland’s ski areas can amount to between 2 and 4 million francs, and prime chalets in the top-end resorts will cost more.

Overall, the price of real estate anywhere in the country means that most people will opt for a mortgage to buy Swiss property. We specialise in providing mortgages in Switzerland for those looking to purchase real estate locally.

Switzerland's luxury mortgage market is predominantly served by private banks that offer very competitive finance packages. Especially if you are open to putting assets under management with a bank, Enness will usually negotiate some highly competitive rates, even if you are taking out a significant mortgage in Switzerland. Your profile, net worth and how liquid you are can also impact what lenders will offer you for a Swiss mortgage. Generally speaking, the more liquid you are, the more space there will be to negotiate a mortgage in Switzerland.

There is healthy competition in the Swiss mortgage market, and Swiss private banks pride themselves on being the first port of call for ultra and high-net-worth individuals looking for a Swiss mortgage. Enness can present your application in the most favourable light to lenders and negotiate a tailored finance package. Often, Swiss private banks will push to offer more competitive packages than other institutions, which can work in your favour when your broker expertly uses this to your advantage to get the best rate on the market.

In some cases, it will be possible to secure 100% loan-to-value ratios for a Swiss mortgage if you have a certain background or assets. These mortgages in Switzerland are rare and are typically reserved for high-value clients who commit to putting assets under management. In these cases, the bank will usually require that the institution's asset management division handles around a quarter of the mortgage value.

Buying a property in Switzerland doesn’t automatically mean that a domestic lender or private bank will be the best option for you. International private banks can offer Swiss mortgages, and again, if you have a high profile or substantial wealth, you will generally have more options from lenders.

Not everyone is eligible to buy Swiss property and therefore a mortgage in Switzerland. Non-residents can only purchase Swiss real estate in certain areas of the country. For non-national Swiss residents (permit holders), other rules allow for more flexibility on what and where they can buy property. Overall, however, Switzerland restricts how much of its property stock can be owned by foreign nationals and the regulations are strictest for non-resident buyers.

The rules surrounding who can buy property are known as the Lex Koller legislation. The rules are designed to limit the amount of Switzerland’s housing stock that foreign nationals can own. Given the significant demand for Swiss properties (especially from high-net-worth individuals drawn by Switzerland’s high quality of life), the number of foreign nationals who reside in Switzerland and the increasing property prices, the Lex Koller legislation is designed to ensure Swiss citizens are not priced out of their own market.

If you are eligible to buy property in Switzerland either as a resident or as a non-resident foreign national, you’ll also need to ensure you understand the rules regarding residency. Ownership of a holiday home allows you to spend time in Switzerland at your property but does not serve as a route to Swiss residence or give the right to spend significant periods of time in the country.

As a non-resident, you can purchase holiday homes in specific parts of Switzerland, designated as ‘tourist’ areas, which are mainly confined to mountain resorts (although not all ski areas are included). Lex Koller laws also influence the surface area of the Swiss real estate you can purchase. In a bid to limit significant developments or extensive properties in pristine mountain areas, as a foreign national, you will be able to buy real estate that has a maximum of 200 m2 of living space. Generally, you will be able to purchase properties with a slightly larger surface area than this, given outside terraces, the cellar (standard in most Swiss properties), and certain parts of a building (with low sloped ceilings, for example) are excluded from what constitutes living space.

While the rules can seem daunting, most foreigners buying in Swiss tourist areas (including some of the country’s most popular ski resorts) can buy property. Switzerland’s local authorities are well-staffed, proactive, and helpful. The application processes move quickly, meaning that buying a property as a foreigner will not add unnecessary time to how long the process takes.

Liquidity is essential for non-resident buyers of Swiss properties. In the most sought-after tourist areas, high-value properties don’t necessarily come up for sale often and being able to move quickly is imperative if you don’t want to buy in cash and would prefer a mortgage in Switzerland. With properties regularly selling for multiple millions of francs, Swiss mortgages are popular, especially given property finance can be structured to your advantage.

Some non-resident buyers work within principle offers, but you can also approach Enness if you have found a Swiss property you would like to buy and need to secure a Swiss mortgage. Enness can source offers in as little as a couple of days if required, ensuring you retain a competitive advantage in the market.

For foreign nationals’ resident in Switzerland, second homes are popular. Especially in the wake of COVID-19, many individuals and families have explored spending more time out of larger towns, staying for holidays, weekends and prolonged periods in Swiss second homes. The continued appreciation of Swiss property also makes second homes an interesting investment opportunity.

While there are restrictions on property purchases (depending on how many non-Swiss owners there are in the region you want to buy), purchasing a second home as a Swiss resident is much more straightforward than buying as a non-resident. Mountain bolt holes are especially popular, especially those within easy reach of Geneva, Bern, Zürich, Zug and Lugano.

Your nationality can influence if, and where you can buy a second home, but provided you have a long-term residence permit, the process can be relatively straightforward, and you are free to purchase property in most parts of Switzerland.

Mortgages are especially popular for second homes in Switzerland, given the considerable costs of Swiss property. Likewise, you may not want to deplete a large savings pot, securities and other assets by liquidating them or putting all your available capital into a second home. The competitive cost of finance and the advantageous packages available, notably from private banks, also add to the appeal of a mortgage for a second home for resident buyers.

Naturally, some of the best mortgages in Switzerland come from the country’s multitude of private banks. Able to cater to high-value property purchases, private banks can easily cater to international clients buying property in Switzerland with global assets and wealth.

Property transactions in Switzerland move quickly, and while working out what finance you can secure before you buy is commonplace, in some cases, individuals will place an offer on a property before they have a definitive mortgage offer from a lender. (It is vital to seek tailored advice in this respect and ensure you can withdraw from the sale without penalties if you cannot secure a Swiss mortgage). Switzerland’s private banks can quickly provide offers and finance to keep pace with the speed at which Swiss property purchases are usually completed.

Buying property in Switzerland doesn’t necessarily mean that a domestic private bank will give you the best offer. Depending on your nationality or country of residence (if you are outside Switzerland) and or your financial background, your mortgage broker in Switzerland may well propose they negotiate with other private banks or lenders on your behalf. Other financial institutions and smaller lenders have moved to offer Swiss mortgages over the past few years, and many of these players offer highly competitive finance packages.

Enness will talk you through your options for lenders and explain which institutions are likely to give you the best rates (and why). Your mortgage broker in Switzerland will source several offers for you to choose from and ensure that your Swiss mortgage is structured competitively regarding your overall situation.