Many people in Switzerland dream of finally owning their own house or flat instead of renting. But is it achievable? Find out now by answering these two questions. Firstly, you need to check your finances to see if you can achieve the property of your dreams with your current funds. This is your first point of reference.

Do I bring in enough income?

If you want to buy your own home, you must finance at least 20% of the purchase price with equity capital. This percentage may increase, depending on the property valuation of the financing institution.  This is always the case if the valuation is lower than the agreed purchase price. At least 10% must be contributed as equity capital (excluding funds from 2nd pillar employee benefits). The remaining 10% can be covered with capital from the 2nd pillar.

• All your savings accounts
• Company and private pension provisions (pillars 2 and 3)
• Advance against inheritance or gifts

Under certain circumstances, you can fund up to 80% of your property’s value with mortgages. When issuing your mortgage, the financial institution also checks whether you are able to finance your desired property in the long term (see next question).

Is my income high enough for me to afford the property in the long term?

To own a house or flat, you have to be able to cover costs that arise in relation to your property in the long term. This is referred to as affordability. Generally, this is when you do not spend more than approximately one third of your gross income in order to cover monthly recurring costs for your home. These monthly recurring costs include:

• The mortgage interest rate: most banks use a mortgage interest rate of 5% to calculate affordability of a finance plan (5% to make sure that the finance plan would still be affordable even in the case of sharply rising interest rates)
• Repayment as a contractually agreed pay back plan for a second mortgage
• Maintenance and other costs for the property

Important

When you apply for credit, the bank checks your creditworthiness (credit standing) and estimates how likely it is that you will be able to fulfil your financial obligations. For this, the bank considers factors like your payment behaviour in the past and any outstanding obligations, enforcements and debt collection measures. Credit standing is an important factor when it comes to getting a mortgage. Financial institutions can obtain the information needed for this from credit standing databases or debt collection offices. This information influences your chances of getting credit as well as the conditions, such as the interest rate or the maximum credit amount.

Can you afford owning your own home? Find out now with the mortgage calculator

Are you looking to find out if your income or funds are enough to finance your dream property?

How to increase your room for manoeuvre when financing your own home

• More funds: have you just taken inventory and realised that your funds aren’t enough to finance the home you’re after? Maybe your relatives could help you out through an advance against inheritance, an interest-free loan or a gift.
• High credit standing: to get a high credit rating, it's worth paying bills on time and avoiding getting into situations where you are chased for payment by debt collectors. Additionally, the lower your credit, debt and other financial obligations are, the better.