Financial Requirements for a mortgage

To be accepted for a mortgage in Switzerland, a borrower must fulfill two minimal conditions that the lenders have specified:

Both the affordability and the loan-to-value ratio must be within pre-established limits. Loan to Value Ratio, i. E. The mortgage’s share of the home’s market value cannot exceed 80%. Inversely, this means that the borrower is required to put down at least 20% of the market value in their own funds.

Own funds go beyond cash; they also include inherited assets and personal loans. Pension funds from the second and third pillars may also be withdrawn beforehand or pledged in order to raise equity. The second prerequisite is that a mortgage must be affordable. Simply put, this means that your gross income must be enough to pay for all interest, amortization, and upkeep costs associated with the property. The amount of your monthly mortgage payments shouldn’t exceed 30% of your gross income.