What to remember about the down payment for a property purchase in Switzerland

In Swiss high-end real estate, each acquisition project is unique – but one constant remains: the necessity of a solid down payment to access a mortgage loan. At FGP Swiss & Alps, we support on a daily basis wealthy buyers, expatriates or demanding investors in the structuring of their down payment. Here is the essential to know to approach calmly this strategic step.

What share of own funds must be planned for a property purchase in Switzerland?

To acquire a primary residence, Swiss banks generally require a down payment covering at least 20% of the value of the property. In the case of a secondary residence or a prestige property, this threshold often rises to 40%, due to a higher risk taken by the lenders.

Example: for the purchase of a chalet estimated at 3,000,000 CHF, it is necessary to plan at least 1,200,000 CHF of own funds.

Can pension provision be used to finance a luxury property?

Yes, partially. In Switzerland, up to 10% of the down payment can come from an early withdrawal from the 2nd pillar or pillar 3a, but only for a primary residence occupied by the buyer. For a secondary residence, pension assets are generally not eligible.

Any use of pension provision must be preceded by an in-depth analysis. At FGP Swiss & Alps, we collaborate with experts to assess the impact of this operation on your retirement capital and on your personal taxation.

At the buyer’s expense: fees and valuation differences

It is crucial to note that the bank finances only the appraised market value of the property, and not its listed price. If a property is offered at 5.5 million CHF but the bank values it at 5 million, the difference (500,000 CHF) is entirely at the buyer’s expense – in addition to the basic down payment.

In addition, the buyer covers:

• Registration and notary fees
  
• Cantonal transfer taxes
  
• Planned maintenance costs
  
• Possible renovations or custom furnishings

Conditions to obtain a mortgage in Switzerland: much more than the down payment

A substantial down payment is a first condition. But to secure financing, banks also require sufficient financial capacity.

In practice:

• The expenses related to the property (interest, amortization, maintenance costs) must not exceed 33% of the gross annual income.
  
• In case of exceeding this threshold, the loan application is generally refused, regardless of the down payment.
  

Our team supports you in simulating your financial capacity and anticipating the mortgage structure best suited to you.

What exactly is the down payment?

It is the sum that you inject yourself into the purchase of the property, without going through external financing. The higher your down payment, the lower the mortgage – and therefore the lighter your monthly payments.

The typical structure of Swiss real estate financing is as follows:

• 20% minimum of the property value financed by the buyer
  
• 80% maximum by mortgage, often divided into:
  
  • 1st mortgage (up to 66%)
    
  • 2nd mortgage (up to 14%, to be amortized within 15 years or before retirement age)

What is accepted as equity by banks

Swiss financial institutions consider as “equity” or “down payment” the following elements:

Bank savings (current or savings accounts)

The most classic source. This capital is available immediately. We advise keeping a safety reserve for unforeseen events (renovation, taxes, maintenance…).

Securities and financial products

The income from the sale of shares, bonds, or investment funds can be used. It is also possible to pledge them to benefit from credit leverage, but this exposes to a possible devaluation of the securities.

Surrender value of a life insurance policy

Most Swiss guaranteed-capital contracts can be redeemed or pledged to constitute a down payment. This solution remains flexible and fiscally advantageous.

Donation, advancement of inheritance, family loan

Intra-family aid is accepted if it is formalized (deed of donation or notarized loan). Attention: some donations are subject to specific duties depending on the cantons.

Withdrawal or pledge of the 3rd pillar A

Fully considered as “hard” equity, pillar 3a is an excellent resource, subject to a good tax analysis.

2nd pillar (pension fund)

Usable up to 10% of the value of the property for a main residence only. However, this reduces future benefits. Pledging is often preferred to outright withdrawal.

Is it wise to increase your down payment beyond 20%?

Yes, in several cases:

• To reduce the amount of interest in the long term
  
• To avoid a 2nd mortgage to be amortized
  
• To improve your chances of obtaining a preferential-rate mortgage
  

However, if interest rates are historically low, it may be more strategic to keep part of the available capital for higher-yield investments.

At FGP Swiss & Alps, we analyze with you the balance between return, security, and taxation, in order to build the optimal solution.

Does a mortgage depend solely on the listed price?

No. The bank evaluates the property according to its own methodology (price per m², condition, yield, geographical location…). If the appraised market value is lower than the purchase price, the difference is your responsibility.

This gap is common in luxury real estate, where rarity and character can exceed the bank’s evaluation grids. In these cases, our role is to negotiate, justify, and intelligently structure the financing plan.

Secondary residences or exceptional properties: specific rules

For mountain chalets, vacation properties, or secondary residences, the requirements are stricter:

• Minimum personal contribution of 40%
  
• No use of pension assets possible
  
• Higher income required to demonstrate financial capacity
  

That is why we advise you to anticipate these constraints early in the project, with the help of our mortgage partners specialized in the high-end segments.

Your tailor-made support with FGP Swiss & Alps

Each real estate acquisition is a life project or a strategic investment. At FGP Swiss & Alps, we offer much more than simple access to exceptional properties:

• Wealth and tax advice on your personal contribution
  
• Access to a network of independent financial experts
  
• Analysis of your borrowing capacity and your mortgage structure
  
• Connection with high-end banking partners

FAQ on personal contribution in Switzerland

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