A good income is not always enough to obtain a mortgage. In Switzerland, banks assess financial capacity using theoretical costs designed to test the soundness of the financing, including if interest rates rise.
Equity: the starting point
For an owner-occupied home, lenders generally require at least 20% equity. A minimum share must come from resources other than occupational pension funds. Additional requirements are possible when the bank’s valuation is lower than the purchase price.
Why a calculation rate of around 5%?
Even if the mortgage rate actually paid is lower, many banks use a theoretical rate close to 5%, to which they add maintenance costs and the planned amortisation.
Simplified example
For a property of CHF 1’000’000 financed with CHF 200’000 of equity and a CHF 800’000 mortgage:
- Theoretical interest (5% of CHF 800’000): CHF 40’000 per year.
- Maintenance and charges (1% of value): CHF 10’000 per year.
- Indicative amortisation of the amount exceeding two-thirds of the value over 15 years: about CHF 8’889 per year.
The theoretical cost therefore comes to about CHF 58’889 per year. For illustration, with a limit of one-third of gross income, this corresponds to an annual income of about CHF 176’667. The precise criteria vary depending on the lender and the file.
Distinguishing bank affordability from the real budget
The budget actually paid depends on the contractual rate, amortisation, insurance, condominium charges and maintenance. Both analyses should be compared.
Prepare a convincing file
Gather proof of income, equity and debts, together with the property documents. A consistent presentation makes it possible to identify difficulties before submitting an application.
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Illustrative simulation, not a credit offer or a bank decision.