A Swiss mortgage affordability calculator helps you estimate whether a property may fit your finances. It does not guarantee mortgage approval. Swiss lenders assess the borrower, property value, equity, income, existing commitments and supporting documents using their own criteria.

What Swiss lenders usually test

A common Swiss affordability approach does not calculate affordability only from the mortgage rate available today. Instead, the lender applies a theoretical or stress interest rate, often around 5%, adds amortisation and an allowance for maintenance and ancillary costs, often around 1% of the property value, and compares the resulting annual housing cost with sustainable gross income. A commonly used threshold is around one-third of gross income, although lenders may use different methods and requirements.

These percentages are widely used reference points, not a universal legal approval formula. Confirm the current assumptions with the lender. The calculation may also differ between an owner-occupied home and an investment property.

First-rank and second-rank mortgages

Swiss financing is commonly divided into mortgage tranches. The first-rank mortgage covers the lower portion of the property’s financing and normally does not have the same mandatory amortisation requirement. The portion above the first-rank limit is commonly called the second mortgage and generally has to be amortised within 15 years or by retirement, whichever comes first, depending on the lender and applicable rules.

This distinction matters. A buyer may focus on the interest rate but forget that the second mortgage creates a required annual repayment. In a simplified example, a CHF 200,000 second mortgage amortised over 15 years creates approximately CHF 13,333 of annual amortisation before interest. That repayment can materially affect affordability. The exact first-rank limit and amortisation obligation depend on the lender’s valuation and financing policy.

Worked example: a CHF 1 million home

Assume a buyer wants to purchase a home for CHF 1,000,000. For illustration, assume the bank requires 20% equity, so the mortgage is CHF 800,000. Using a simplified two-thirds first-rank assumption, approximately CHF 666,667 is first-rank financing and approximately CHF 133,333 is second-rank financing. The exact split depends on the lender’s valuation and rules.

Using a simplified stress test:

  • Stress interest: CHF 800,000 × 5% = CHF 40,000 per year.
  • Maintenance and ancillary-cost allowance: CHF 1,000,000 × 1% = CHF 10,000 per year.
  • Second-mortgage amortisation: CHF 133,333 ÷ 15 = approximately CHF 8,889 per year, if the second-rank amount must be repaid over 15 years.
  • Total stressed annual housing cost: approximately CHF 58,889.

At a one-third affordability threshold, the buyer would need sustainable gross income of approximately CHF 176,667: CHF 58,889 × 3 = CHF 176,667. This is an illustration, not a lender decision. If the lender uses a different first-rank limit, property value, stress rate, maintenance allowance or income definition, the result changes.

Equity is more than the down payment

With a CHF 1,000,000 purchase and 20% equity, the buyer needs CHF 200,000 toward the financing. In addition, the buyer may need cash for notary, land-registry, transfer or transaction costs, valuation, financing fees and immediate renovations. These costs vary by canton, municipality, lender and transaction and may not be fully financeable.

Some lenders also distinguish between liquid funds, pension assets and other sources of equity. A calculation should therefore show both the minimum equity requirement and the cash reserve remaining after completion.

Income and commitments

Use sustainable income, not an optimistic one-off year. Lenders may assess bonuses, commissions, self-employment income, pension income and foreign income differently. They may also deduct existing mortgages, personal loans, leasing payments, maintenance obligations or other recurring commitments.

For two borrowers with the same salary, the result can differ if one has a CHF 1,000 monthly leasing obligation or support payments. An affordability tool should include these commitments instead of analysing the property in isolation.

Investment property is different

For a rental property, the lender may consider rental income, vacancy, operating costs and the property’s value or income approach. Do not assume that projected rent will be accepted in full. The borrower may also need additional equity and reserves. Test the purchase with lower rent, vacancy, repairs and higher refinancing costs.

Use three scenarios

  • Base case: lender’s current offer, realistic income and expected property costs.
  • Stress case: approximately 5% theoretical interest, required amortisation and a 1% maintenance allowance, where appropriate.
  • Personal downside case: lower income, temporary vacancy, CHF 20,000 of repairs or a higher refinancing rate.

If the purchase works only in the base case, the household may have too little margin even if a lender is willing to approve it.

Questions to ask the lender

  • Which property value is used: purchase price, valuation or the lower of the two?
  • What stress interest rate and maintenance allowance apply?
  • Which part is first-rank and which part is second-rank?
  • How must the second mortgage be amortised, and by when?
  • How are bonuses, pension assets and foreign income treated?
  • Which acquisition costs must be paid from cash?
  • What happens when the mortgage is renewed?

How Valory Deals can help

Valory Deals helps buyers compare purchase price, equity, financing assumptions, amortisation and affordability scenarios before deciding whether—and under which conditions—to buy. It is a decision-support tool, not a mortgage approval, regulated advice or guarantee of eligibility.

This content is provided for general informational purposes and does not constitute legal, tax, financial or investment advice. Swiss affordability conventions, lender criteria, mortgage structures and outcomes may vary depending on the lender, canton, property, valuation, income and individual situation. Percentage assumptions and calculations in this article are illustrative and should be checked before relying on them.