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Swiss Mortgage Factsheet and FAQ

Switzerland Mortgage Guide Fact Sheet and FAQ – Frequently Asked Questions

Fact Sheet: Swiss Mortgages for Non-Residents (HNWIs)

Key Facts:

Eligibility:

  • Foreign nationals can purchase property, subject to strict regulations (Lex Koller & Lex Weber).
  • Typically limited to holiday homes in designated tourist areas; restrictions apply for non-residents.
  • Mortgages available, but banks require significant financial assets and strong income.

Mortgage Types:

  • Fixed-Rate Mortgages: Most common; stable repayments for the agreed term.
  • Variable-Rate Mortgages: Flexible, tied to SARON (Swiss base rate) plus margin.
  • LIBOR/SARON-based Mortgages: Variable interest based on market reference rates.
  • Interest-Only Mortgages: Common for high-net-worth clients, with pledged asset collateral required.

Mortgage Process Timeline:

  • Initial consultation and pre-approval (~1-2 weeks).
  • Property search and reservation contract.
  • Formal mortgage application and property appraisal (3-4 weeks).
  • Mortgage approval & signing of deeds at notary (~6-8 weeks total).

Mortgage Features:

  • Typical mortgage terms: 5-15 years fixed, renewable.
  • Common practice: Amortise to ~65% LTV; higher LTV possible with pledged assets.
  • CHF-denominated mortgages standard; multi-currency loans possible but uncommon.

Key Numbers:

Aspect Typical Figures
Loan-to-Value (LTV) Non-Residents: Typically up to 60%-70%; amortised down to ~65%
Interest Rates Fixed: ~2%-4%; Variable: SARON + ~0.8%-1.5% margin
Deposit (Cash) Usually 30%-40% of property value
Debt-to-Income Ratio Typically around 33% of net monthly income
Minimum Loan Amount Usually CHF 500,000+
Typical Mortgage Term Typically 5-15 years, renewable
Mortgage Registration Fees ~0.5%-1% of loan amount

Key Costs & Taxes (Beyond Mortgage):

Property Purchase Taxes & Fees:

  • Notary & Registration Fees: Approx. 2%-5% of property price (varies by canton).
  • Property Transfer Tax: Typically included within the 2%-5% notary fees.
  • Mortgage Registration (Pfandbrief): Approx. 0.5%-1% of loan value.

Annual Property Taxes:

  • Cantonal/Municipal Annual Property Tax: 0.1%-0.3% of the taxable value annually (varies widely by canton).

Wealth Tax:

  • Applies on net assets, including Swiss property (varies significantly by canton; typically 0.1%-1% annually).

Rental Income Tax:

  • Rental income taxable; mortgage interest fully deductible.

Capital Gains Tax (CGT):

  • Applicable upon property sale; rate declines with length of ownership.
  • Rates vary widely by canton (typically 10%-50% based on holding period and canton).

Equity Release & Refinancing in Switzerland:

Equity Release:

  • Limited; primarily through private banks with substantial pledged assets.
  • Usually limited to 30%-40% LTV without substantial asset backing.
  • Higher registration and administration fees apply.

Refinancing:

  • Common practice; typically used to benefit from lower rates or improved terms.
  • Early repayment penalties applicable (typically the interest difference over remaining term).

Key Considerations:

Documentation Required:

  • Passport, proof of address, detailed financial statements (bank/investment accounts).
  • Tax returns and evidence of stable income and substantial assets.

Life and Property Insurance:

  • Life insurance not compulsory but commonly required or recommended by lenders.
  • Property (home) insurance mandatory.

Foreign Currency Risks:

  • Mortgages usually in CHF; borrowers exposed to exchange-rate fluctuations if income/assets held in other currencies.

Ownership Structures:

  • Usually personal ownership; corporate structures permitted but add complexity.
  • Trusts recognised in limited cases; specialist advice recommended.

Resale Considerations:

  • Limited early repayment flexibility; penalties apply.
  • Capital gains tax applies upon resale; can significantly impact net proceeds.

Illustrative Example Scenario:

  • Property Purchase: Chalet in Verbier, CHF 2 million.
  • Mortgage: 65% LTV (CHF 1.3 million), 10-year fixed-rate at 2.5%.
  • Monthly Payment: Approx. CHF 2,700 interest-only, plus amortisation.
  • Deposit & Fees: CHF 700,000 deposit + approx. CHF 80,000-100,000 fees (~CHF 800,000 total upfront).
  • Annual Property Tax: Approx. CHF 2,000-4,000 depending on canton.
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Frequently Asked Questions (FAQs):

Can Non-Residents Obtain Swiss Mortgages?

Yes, non-residents can obtain mortgages but face stricter eligibility, higher deposit requirements, and must meet asset and income criteria.

What is the Typical LTV for Non-Residents?

Usually around 60%-70%, often amortised down to around 65% over time.

Are Interest Rates Fixed or Variable?

Both options available, with fixed-rate mortgages most common due to stability.

How High are Property Purchase Fees?

Expect total fees (notary, registration, transfer) around 2%-5% depending on canton.

Can Non-Residents Use Equity Release?

Limited options exist, generally through private banking arrangements, typically capped around 30%-40% LTV.

Is Property Insurance Mandatory?

Yes, property (home) insurance is mandatory. Life insurance optional but commonly recommended.

Are There Restrictions on Foreign Buyers?

Yes, non-residents typically restricted to holiday homes in tourist zones, with regulated quotas under Lex Koller.

What are the Capital Gains Taxes?

Significant and canton-dependent, typically declining with longer property ownership (rates range 10%-50%).

Are Early Repayment Penalties Applicable?

Typically, yes—often calculated as interest rate differential over remaining fixed term.

What Currency Risks Exist?

Loans usually in CHF, potentially exposing borrowers to currency fluctuations if income/assets are held in foreign currencies.

Can I get a mortgage in Switzerland as a non-resident foreigner?

Yes, non-residents can obtain Swiss mortgages provided they meet the qualifications. Major Swiss banks and some private banks do offer mortgages to foreign buyers who are purchasing authorised properties. You’ll need to buy an eligible property (usually a holiday home with a Lex Koller permit) and fulfill the bank’s criteria (strong income, big down payment, etc.). It’s not as straightforward as for a local, but many foreigners secure mortgages each year – especially HNWIs with good financial profiles. Engaging a bank’s international mortgage unit or a broker early on is key to understanding your options.

How much can I borrow – what is the maximum Loan-to-Value (LTV) for non-residents?

Typically, Swiss banks lend around 50% to 60% of the property value to non-resident buyers. Some might go up to ~70% if you’re a very strong client or willing to pledge extra assets. In rare cases (with private banking arrangements), financing up to 80-100% can be achieved by collateralising other assets, but purely against the property value, 60% is a common max. Remember, at least 20% of the purchase price must be your own cash (and practically 40% in many cases for foreigners). Plan to put a substantial down payment.

What interest rate will I pay as an international borrower?

You’ll pay roughly the same interest rates that local borrowers pay, because Swiss mortgage rates are based on the market and loan product, not on your residency. As of early 2025, for example, a 10-year fixed rate is about 1.3% – 1.8% for top-tier clients, and a floating SARON-based rate around 1.5% – 2.0%. Non-resident loans sometimes incur a small surcharge (perhaps +0.1%) if there’s extra perceived risk or admin, but often private banks match local rates especially if you have a broader relationship. So you can enjoy Switzerland’s low rates. Keep in mind rates fluctuate – they were even below 1% a couple years back, could rise if the SNB hikes, etc. Always get a personalised quote.

Do I need a Swiss bank account to get a mortgage?

Yes, practically you will need a Swiss bank account. While technically one could get a mortgage without a prior account, in reality the lending bank will require you to open an account with them for the loan disbursement and repayments. In fact, many banks condition lending on you doing some private banking with them. Even if not, you’ll want a local account to pay Swiss bills (utilities, taxes) and the mortgage. The good news is that opening an account comes hand-in-hand with the mortgage process. Some banks may have minimum balance requirements for non-resident accounts, but if you’re an HNWI, maintaining those likely isn’t an issue. There are instances where someone got a mortgage while still abroad and opened the account concurrently, so it’s usually straightforward once the bank agrees to lend.

What documentation will banks require from me?

Be prepared to provide extensive documentation, such as:

  • Proof of income: tax returns, payslips, company financials if self-employed.
  • Proof of assets: bank/brokerage statements showing your liquid assets, investments, other real estate.
  • Credit references: possibly a credit report from your country, or at least a declaration of debts.
  • Identification: passport, proof of current address.
  • Proof of source of funds: e.g., if your down payment comes from the sale of another property or business, documents for that (to satisfy anti-money-laundering checks).
  • Property documents: copy of the reservation contract, property details (which the realtor or notary provides).

The bank basically wants to fully understand your financial situation and ensure you can pay the mortgage even under stress. As a high-net-worth individual, also be ready to discuss your broader asset holdings – some banks have internal forms to list your net worth. It can feel intrusive, but it’s standard procedure in private banking due diligence.

Are there any special conditions for Americans (or other nationalities)?

U.S. citizens and U.S. tax residents can face a bit more difficulty due to FATCA (the U.S. financial account reporting law). Some Swiss banks do lend to Americans but may require larger assets under management or route you through their U.S.-client compliant divisions. There might be extra paperwork (W-9 forms, etc.). Similarly, nationals from countries under sanctions or with less transparent banking systems might face extra compliance. But generally, if your money is clean and you’re willing to provide all necessary info, nationality alone isn’t a deal-breaker except at a few banks with policy restrictions. If one bank is hesitant about your nationality, another might be fine. Using a broker who knows which banks serve which nationalities can help. Other than that, the process is the same, just possibly more hoops for compliance.

Can I rent out the property when I’m not using it?

Usually yes, if it’s a holiday home acquired under Lex Koller, you are allowed to rent it out on a short-term basis (like seasonal or weekly rentals to tourists) when you’re not there. In fact, many foreign owners do so to offset costs. What you typically cannot do is rent it out long-term (multi-year lease) to someone as their primary residence – because then it’s not really a “secondary/holiday” use. The intention is that it remains a second home. But a few weeks or months rental a year is fine. Check the specific wording of your cantonal permit; some cantons explicitly permit renting to third parties as part of the authorisation. Also, if the property is in a serviced residence or condo-hotel, there might be a management program to rent it out for you. Just remember to declare that rental income to Swiss tax authorities and pay the requisite taxes (and tourist taxes per rental).

What are the tax benefits of having a mortgage as a non-resident owner?

The main benefit is that mortgage interest is tax-deductible against the imputed or rental income from the property, often significantly reducing your Swiss income tax on the property. For example, if your imputed rent is CHF 50k and you pay CHF 50k in interest, they cancel out – you owe basically no Swiss income tax on that notional rent. Additionally, the debt reduces your net wealth subject to wealth tax (you’re only taxed on net equity). This is a reason many savvy investors carry a mortgage – it’s a form of leverage that also saves taxes. However, note that if you have no Swiss income to offset (say you don’t rent out at all), the interest deduction mainly helps with the imputed rent calculation (which you’d have to pay tax on otherwise). Another indirect benefit: keeping a mortgage means you keep liquidity free for other investments, which might yield returns elsewhere. Just ensure you actually invest that freed capital wisely.

Will I have to pay capital gains tax when selling, even as a foreigner?

Yes, Switzerland will impose capital gains tax on any profit you make when selling the property, regardless of your residency. The tax is calculated by the canton and is typically higher if you sell in the short term (within a few years) and lower if you hold long-term. For example, selling within a year could see a tax of 30-50% on the gain in some cantons, while selling after 10+ years might incur around 15% or less. As a non-resident, you don’t get an exemption; in fact, the notary will usually withhold the estimated tax from your sale proceeds to ensure it’s paid. If you plan to reinvest in Swiss property, roll-over relief might not apply unless you become a Swiss resident and make it your primary home (complex scenario). So assume that Swiss CGT will apply. The good news: if your home country taxes capital gains too, typically they will credit the Swiss tax you paid, under double taxation treaties, so you’re not taxed twice on the same gain. But you’ll at least pay the Swiss portion. Always factor in holding period and potential CGT when deciding when to sell.

Are there any restrictions on re-selling the property (like can I sell to anyone)?

You can sell to Swiss or foreign buyers, but if selling to another foreign non-resident, that buyer will also need to qualify for a permit. There may be a minimum hold period in some cantons for foreign-owned holiday homes (commonly 5 years) before you are allowed to sell to another non-resident. If you need to sell earlier, some cantons require an exception (like hardship) or they might only allow sale to a Swiss/permitted resident within that early period. This is to prevent quick speculative flips by foreigners. Check your purchase permit – it might state a period. If you sell to a Swiss citizen or a foreigner with Swiss residency, Lex Koller doesn’t apply to them, so that restriction wouldn’t matter (you could sell anytime to such a buyer because they don’t need a permit). Also be mindful of the high CGT if you sell very soon – that’s a natural deterrent. But outside of those aspects, there’s no separate “foreigner exit tax” or anything. It’s a free market when you go to sell; just ensure the buyer can legally buy (the notary will sort that out anyway).

What’s the process if I decide to move to Switzerland later?

If you move to Switzerland and obtain a residence permit (B or C), the property you bought as a holiday home can typically become your primary residence without issue, and you’ll no longer be under Lex Koller restrictions for owning property (you could even buy additional properties once a resident, within normal limits). You should inform the authorities that you are now a resident and that the property status is now primary (they may then not count it under foreign quotas, etc.). Tax-wise, you’d then start paying Swiss taxes on your worldwide income/wealth as a resident, and the imputed rent would be part of your taxable income (but you’d no longer be limited to that imputed scope only). One thing: if as a non-resident you only had a holiday permit for that property, upon becoming resident you gain rights to hold it without that holiday permit – essentially you “fall out” of the Lex Koller regime and join local regime. That’s usually straightforward. You might want to double-check if any earlier permit conditions (like “must not rent long-term”) are moot once you’re resident (likely yes, moot, because now you’re treated like a local owner). In short, becoming a Swiss resident typically only expands your rights (not constrains) in terms of property ownership. It could also help with refinancing or getting higher LTV on mortgage since now your income is Swiss-based (maybe not needed if you’re HNWI, but worth noting).

Could Swiss laws change to restrict foreigners more in the future?

Swiss laws on foreign property ownership (Lex Koller, Lex Weber) have been in place for decades, with occasional adjustments. It’s always possible political sentiment could lead to tighter quotas or new restrictions, but existing owners are generally grandfathered. For example, if in the future they reduced the number of permits, that might just make it harder for new buyers; it wouldn’t force you to sell. A potential change floating in politics is whether to further restrict foreigners from buying in cities (currently they mostly cannot anyway except in special cases). For holiday homes, the Lex Weber law already limits new second homes for everyone. So major changes are not highly likely, but minor tweaks can happen. As an HNWI, as long as you comply with the laws in force, you should be fine. If anything, enforcement might get stricter if abuses are found (like people illegally renting or buying multiple units – those crackdowns could happen). But if you follow rules, you enjoy very secure property rights in Switzerland. When in doubt, keep in touch with your notary or lawyer who can update you on any legal changes.

How long does the whole buying process take for a foreign buyer?

Typically, 2 to 4 months from finding a property to closing. It can vary:

  • Finding the right property might take time depending on the market (that part is up to you).
  • Once you have an accepted offer, getting the Lex Koller permit could take, say, 4-8 weeks (some do faster, like 2-3 weeks if simple and quotas free).
  • Getting a mortgage approval can take a couple of weeks (more if your documents are slow to gather; but if you prepared beforehand, it’s quick).

So from offer acceptance, expect perhaps 6-10 weeks until you sign the final deed. Sometimes it aligns nicely that permit and mortgage are ready by then.

If you are in a hurry, choose a canton known for quick permits and be very prompt with paperwork. It’s not unheard of to close in 1 month, but that would require permit in hand extremely fast or being in a canton that doesn’t require a formal permit for certain cases (some cantons pre-designate certain properties as permit-free, but that’s rare and usually for residents).

Also, if the seller is in no rush, they might prefer a later closing date to sort their move, etc. So that can add time.

In summary: a few months is average. Use that time to coordinate everything (finances, planning). The process is methodical but not overly lengthy, considering some countries’ property deals can drag on too.

What are typical notary and purchase fees I should budget for?

As discussed in the financing section, budget roughly 3% to 5% of the purchase price for all closing costs (notary, land registry, and any property transfer tax). This percentage heavily depends on the canton:

  • In low-tax cantons (Zurich, Zug, etc.), it could be even less than 1% (since just notary and a small fee, no big transfer tax). But those places usually aren’t available to non-residents as holiday homes, except maybe parts of Ticino or so.
  • In many French-speaking cantons like Vaud or Valais, ~3-5% is common including the property transfer duties.

The notary fee itself might be ~0.5-1% in many cases, and the rest is communal/cantonal taxes.

The realtor’s commission is paid by the seller typically, so as a buyer you don’t pay that.

Always ask the notary for an estimate of all closing costs early on. That way you can have that cash ready on top of your down payment.

Also remember to budget moving costs or initial furnishing if needed, and perhaps a few months of mortgage interest and expenses as a cushion.

Can I use financing from a bank in my home country to buy Swiss property?

Generally, Swiss properties are financed by Swiss banks, because Swiss law provides strong collateral through the land charge, which foreign banks might not easily enforce. A foreign bank might lend against your personal assets (not secured on the Swiss house) and you use those funds to buy in cash – that’s one way. But that’s essentially like you doing a cash-out refinance on a property in your home country or a securities-backed loan from your international bank. It won’t be a mortgage secured on the Swiss house unless that foreign bank goes through the process of registering a mortgage in Switzerland (rare, they often don’t bother unless they have a Swiss presence). So yes, you could raise money elsewhere (if you have, say, a line of credit or second mortgage on another home abroad) to pay for the Swiss property. However, then you wouldn’t get the benefit of Swiss mortgage rates (which are often lower) and you might not get Swiss tax deductions on that interest. Most people choose to finance within Switzerland because of low rates and local expertise. If you have a private bank relationship in, say, London, that bank might coordinate with a Swiss affiliate to provide the mortgage in CHF. So effectively, it’s still Swiss-based financing albeit via your global bank’s channels.

Will the bank revalue the property regularly or call in the loan if market drops?

Swiss banks do not typically revalue and demand repayment just because the market fluctuates. Mortgages are contracted long-term and are not marked-to-market in the way margin loans are. As long as you pay your interest (and amortisation, if required) on time, the loan stands. Only if you default or breach conditions would they take action, potentially leading to a forced sale. If the market dropped and your LTV theoretically became, say, 70% instead of 60%, the bank wouldn’t automatically do anything. They might be more cautious to extend new loans or allowing you to borrow more, but they won’t call in the existing loan absent a contractual trigger. During the 2008 financial crisis, for example, Swiss house prices didn’t crash, but even if they had, banks historically work through it with the client rather than sudden margin calls – it’s not like stock collateral. However, note that if you let the property value deteriorate (e.g., you let it fall apart) or do something that devalues it greatly, that might violate your duties. But normal market ups and downs are part of their risk which they mitigate by conservative LTV in the first place. So, rest easy: you won’t get a sudden ask for more money just due to valuation changes.

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