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How big a deposit is required to purchase a house?
How large does my deposit need to be?
When purchasing a flat or house, at least 20 percent of the value of the property must be covered by a deposit. It is important to note that at least half of this (so 10% of the property value) must originate from sources other than your occupational pension fund (2nd pillar).
What does loan-to-value ratio mean?
Loan-to-value ratio refers to the proportion of the property value that is financed by a mortgage. It indicates what percentage of the property value established by the lender is to be covered by a loan (borrowed capital). In Switzerland, the loan-to-value ratio is typically a maximum of 80% of the property value. This means that the buyer must put down a deposit of at least 20%. The loan-to-value ratio is an important factor for banks when it comes to assessing the risk of a mortgage. The lower the loan-to-value ratio, the less risky the financing is from the bank’s perspective, resulting in more attractive mortgage interest rates.
What others wanted to know.
Our mortgage experts give an insight into a selection of the most frequently asked questions. Submit your own question. We will be happy to help you.
Yannick K. (29), Dübendorf
How big does my deposit need to be to buy a house?
When purchasing a property, you will typically need a deposit of 20% of the property's value. This 20% must come from your own funds, which may include pension savings (2nd and 3rd pillars). However, at least 10% must come from sources other than occupational pension assets (2nd pillar).
Jonathan B. (28), Wil
What can I do if my deposit is not enough?
If your deposit is insufficient, you have a several different options:
- Withdraw pension savings: In consultation with your pension scheme, you can withdraw retirement assets from the 2nd and 3rd pillars early to purchase residential property. It’s important to note that at least 10% of your deposit must come from sources other than the 2nd pillar.
- Pledge pension savings: If you have affordability reserves, you can pledge pension savings instead of withdrawing them. The value of the mortgage then increases by the pledged amount, but the advantage is that the monies remain in the pension fund and continue to accrue interest.
- Support from family: Gifts, interest-free loans or remortgaging an existing family property can help to make up for an insufficient deposit.
- Personal contributions: Some mortgage lenders also consider personal manual labour contributed as part of new buildings or renovations as part of the deposit. However, the assessment of such contributions varies significantly and tends to be rather restrictive.
Cristiana B. (21), Köniz
Are 10% deposit mortgages available?
As a rule, no. The deposit requirement is generally always at least 20% of the property value. However, half of this can originate from occupational pension savings (2nd pillar), which means that effectively only 10% of the property value needs to be saved up as liquid funds. Despite this, in individual cases it may be that the lender will approve a mortgage with just a 10% deposit – it’s worth taking advice and comparing products in this respect.
Yannick K. (29), Dübendorf
How big does my deposit need to be to buy a house?
When purchasing a property, you will typically need a deposit of 20% of the property's value. This 20% must come from your own funds, which may include pension savings (2nd and 3rd pillars). However, at least 10% must come from sources other than occupational pension assets (2nd pillar).
Jonathan B. (28), Wil
What can I do if my deposit is not enough?
If your deposit is insufficient, you have a several different options:
- Withdraw pension savings: In consultation with your pension scheme, you can withdraw retirement assets from the 2nd and 3rd pillars early to purchase residential property. It’s important to note that at least 10% of your deposit must come from sources other than the 2nd pillar.
- Pledge pension savings: If you have affordability reserves, you can pledge pension savings instead of withdrawing them. The value of the mortgage then increases by the pledged amount, but the advantage is that the monies remain in the pension fund and continue to accrue interest.
- Support from family: Gifts, interest-free loans or remortgaging an existing family property can help to make up for an insufficient deposit.
- Personal contributions: Some mortgage lenders also consider personal manual labour contributed as part of new buildings or renovations as part of the deposit. However, the assessment of such contributions varies significantly and tends to be rather restrictive.
Cristiana B. (21), Köniz
Are 10% deposit mortgages available?
As a rule, no. The deposit requirement is generally always at least 20% of the property value. However, half of this can originate from occupational pension savings (2nd pillar), which means that effectively only 10% of the property value needs to be saved up as liquid funds. Despite this, in individual cases it may be that the lender will approve a mortgage with just a 10% deposit – it’s worth taking advice and comparing products in this respect.
