Mortgage calculator

How our mortgage calculator works

Our calculator takes account of the main criteria Swiss mortgage lenders review when setting financing terms:

• Your annual income (gross annual salary, bonuses and 13th-month salary)
• Property purchase price
• Equity or down payment (cash, savings, gifts and second-pillar pension funds)
• Fixed-rate mortgage term (to explore SARON financing, contact us)
• Your mortgage interest rate

Using these inputs, our Swiss mortgage calculator provides estimates including:

• Share of equity (%)
• Mortgage amount
• Loan-to-value ratio (%)
• Financing portion known as the “first mortgage”
• Financing portion known as the “second mortgage”
• Actual annual interest costs
• Stressed annual interest costs
• Required annual amortisation
• Annual property maintenance costs
• Total actual annual costs
• Total stressed annual costs
• Required gross annual income
• Costs-to-income ratio
• Estimated monthly financing costs (interest, amortisation and other items based on the calculator’s assumptions)

The results allow you to compare financing scenarios and see how the interest rate, fixed-rate term and amortisation affect the estimated costs. A lender must subsequently confirm the figures, taking into account the mortgage lending value and your personal circumstances.

How mortgages work in Switzerland

A mortgage is a loan secured against real estate. In the event of non-payment, the lender may enforce its security under the applicable legal and contractual conditions. For an owner-occupied main residence, lenders commonly finance up to 80% of the mortgage lending value, which can be lower than the purchase price. Buyers generally need at least 20% equity, some of which must come from sources other than second-pillar pension assets (see the types of equity). Stricter criteria may apply depending on the property and its use.

Example: If a property costs CHF 1’000’000 and the lender values it at the same amount, an 80% loan-to-value ratio corresponds to a CHF 800’000 mortgage. The buyer must contribute a CHF 200’000 down payment, plus purchase-related costs. If the lender’s valuation is lower than the purchase price, more equity will be required.

Beyond these general principles, each lender reviews applications against its own criteria, including affordability limits, property valuation, income quality, employment stability and age. A mortgage broker can help identify suitable financing solutions. Our service is free for private individuals; the partner broker is generally paid by the lender when financing is successfully arranged. The broker can compare proposals from partner banks and insurers.

Calculating interest and the total cost of borrowing

The mortgage interest rate is the cost of borrowing, expressed as a percentage of the outstanding principal. It is a major component of overall financing costs. The Swiss mortgage rate offered depends on factors including the borrower’s financial profile, security and chosen contract term.

Interest costs depend on the outstanding balance over the period, the rate and the day-count convention specified in the contract. For example, using a 360-day basis, the simplified calculation is:

Interest = Outstanding principal x Annual interest rate x (Actual number of days / 360)

Example: For a CHF 600’000 mortgage at 1.5% over three months (90 days):

Interest = 600’000 x 1.5% x (90 / 360) = CHF 2’250

The total cost of financing includes interest and any contractual fees. Amortisation, by contrast, repays part of the principal: it is a cash outflow, not an interest expense. Property purchase and maintenance costs should be considered separately.

Different types of mortgage interest rates

Swiss banks and insurers offer different mortgage products. Three common options are fixed-rate mortgages, SARON mortgages and combinations of the two. Traditional variable-rate mortgages also exist and should not be confused with SARON mortgages.

1. Fixed rate: The interest rate is agreed for a set term, often between two and ten years. A fixed-rate mortgage fixes the rate charged on the outstanding debt, but total monthly costs are not necessarily constant. A fall in market interest rates does not automatically affect an existing contract.
2. SARON mortgage: Its variable rate is based on compounded SARON over the calculation period, plus a margin agreed with the lender. A SARON mortgage can benefit from falling rates but also exposes you to rising interest costs. The adjustment rules depend on the contract.
3. Combined mortgage: It pairs a fixed-rate portion with another portion linked to SARON.

Your choice depends on factors such as risk tolerance, expected ownership period and ability to absorb higher interest costs. A mortgage broker can compare scenarios but cannot predict future interest-rate movements with certainty.

How monthly mortgage costs are calculated

In Swiss mortgage financing, it is important to distinguish interest owed to the lender from principal repayment (amortisation). The term of a fixed-rate contract is not necessarily the time required to repay the mortgage in full. Payments depend on the chosen structure:

• Direct amortisation: Part of the principal is repaid regularly alongside interest. As the debt falls, interest on the remaining balance gradually decreases. For owner-occupied residential property, the portion above roughly two-thirds of the mortgage lending value generally has to be amortised within 15 years, or by retirement if sooner.
• Indirect amortisation: The borrower pays interest and, for example, contributes the agreed amortisation amount to a pledged pillar 3a arrangement. The mortgage debt does not fall immediately; it is repaid later using the accumulated pension assets. Contribution limits, tax implications and contract conditions must be checked.

A loan repaid in full through constant annuity payments follows the formula below. This differs from the partial amortisation normally used for Swiss mortgages:

Constant annuity monthly payment = Principal x Periodic interest rate x (1 + Periodic interest rate)^n / [(1 + Periodic interest rate)^n – 1]

Where:

• Periodic interest rate = Annual interest rate / 12
• n = number of instalments (in months)

Swiss example based on our calculator: A home purchased for CHF 750’000, with an identical mortgage lending value of CHF 750’000, is financed with CHF 150’000 equity (20%) and a CHF 600’000 mortgage (80%). For prudence, our calculator allocates 65% of the lending value to the first portion, or CHF 487’500. The second portion is therefore CHF 112’500, amortised over 15 years at CHF 7’500 per year. This 65% threshold is more conservative than the two-thirds level (approximately 66.67%) used in Switzerland’s minimum amortisation requirements. Assuming an illustrative ten-year fixed rate of 2.05%, estimated monthly costs at the beginning of the financing are:

Initial interest: CHF 1’025/month; direct amortisation: CHF 625/month; estimated maintenance: CHF 625/month; estimated initial total: CHF 2’275/month, including maintenance.

This total includes a theoretical provision for property maintenance rather than an amount paid entirely to the bank. Excluding maintenance, interest and amortisation initially total CHF 1’650 per month. For affordability testing, the calculator also uses a stressed interest rate of 5%, or CHF 30’000 in annual interest. Adding CHF 7’500 in amortisation and CHF 7’500 in estimated maintenance results in stressed annual costs of CHF 45’000, equal to 30% of a CHF 150’000 gross annual income. The indicative minimum gross annual income is CHF 135’000 when costs are limited to one-third of income. In this example, the fixed-rate term is ten years while the second portion is amortised over 15 years, so interest terms must be reviewed when the fixed rate expires. These results are indicative and depend on the calculator’s assumptions and the financing actually arranged.

Optimise your property financing

To seek suitable mortgage terms and manage your costs, several options are worth considering:

• Adjust your down payment: For an owner-occupied main residence, lenders generally require at least 20% equity, including at least 10% of the lending value from sources other than pillar 2. Early withdrawal of second-pillar funds may be possible for owner-occupied housing: up to age 50, it may include the available pension balance subject to applicable conditions; after that, specific limits apply. More equity reduces the debt but should not leave you without a cash reserve.
• Prepare a strong application: Document your income, existing commitments, the source of your equity and the property’s characteristics. Lending value, affordability and each lender’s credit policies influence the terms offered; no interest-rate discount is guaranteed.
• Choose an appropriate amortisation schedule for your budget and retirement plans. Do not confuse the fixed-rate term with the amortisation period: they may be different. Faster amortisation reduces debt and future interest but requires more available cash.
• Compare interest-rate structures: Splitting a mortgage between a fixed rate and SARON may suit some borrowers, but also entails different expiry dates and contractual constraints. No combination is universally better.
• Compare lenders at every renewal and when choosing an initial mortgage. A difference of a few tenths of a percentage point can add up significantly over 20 years.

A personalised review by a mortgage broker can help you understand the choices and select a suitable financing strategy. Their expertise and market knowledge may save you time and money.

Our mortgage advisory services

Our experienced team helps you throughout the process of purchasing and financing property in Switzerland:

• In-depth assessment of your circumstances and needs
• Detailed simulation of your borrowing capacity and mortgage costs
• Tailored financing plan for your property purchase
• Comparison of rates and terms offered by partner lenders
• Tax considerations to have confirmed by a qualified professional
• Personal support in finding and arranging the financing

Our team reviews your enquiry and refers you to a partner mortgage broker to compare financing options available for your application. The service is free and without obligation for private individuals; when a mortgage is arranged, the partner broker is generally paid by the lender. This remuneration should be considered when assessing the independence of recommendations and the range of offers available.

Entrust your property project to our mortgage experts: Contact us for a free, no-obligation consultation. Together, we can find a suitable path to homeownership.