Mortgages in Switzerland

As you would expect with the luxury property market, relatively large mortgages will attract the interest of private banks, especially if you are willing to consider assets under management arrangements. Swiss banks or private banks with significant operations in Switzerland are often Enness' first port of call when it comes to negotiating a mortgage for a Swiss property.

Eager to do business (especially at the top end of the property market and for prestigious clients), many institutions will offer very attractive terms. You will also find that if you have the right profile or can put forward the most relevant details, Swiss banks will aim to be more aggressive on pricing than competitors, which can work in your favour. Even loan-to-value ratios of 100% are possible in certain circumstances. To benefit from this kind of financing, expect the bank in question to request that the bank's asset management division handles around 25% of your mortgage value.

Foreign ownership of holiday homes falls under Switzerland’s Lex Koller legislation, which effectively sets a quota of foreigners who can live or purchase property in Switzerland. Cantons (similar to states in the US or counties in the UK) in Switzerland can operate relatively autonomously from the Swiss Federal Council, which means that rules can vary across the country. It's important to note that if you are granted permission to buy a holiday property in Switzerland, you can spend periods of time in the country as the owner of a holiday home, but you don't automatically qualify as a resident or benefit from other aspects of Swiss residency.

The Lex Koller laws will also restrict the size of property you can purchase under the rules for foreign buyers of holiday homes. You will be able to buy a property of up to 200 m2 of "liveable" space, although this excludes areas like balconies and the basements standard in most Swiss property.

There are exceptions to these Lex Koller rules, but they tend to be few and far between. To apply to buy outside of a holiday region as a foreigner, you will need to work with local Swiss lawyers who will review your situation and assess if you have circumstances that may warrant an exception. The relevant canton will review any such submission on a case-by-case basis. Very specific or compelling reasons will need to be put forward to persuade the authorities you have a good reason to allow you to buy outside of a holiday region.

While the rules allowing foreigners to buy holiday homes can narrow your options when it comes to buying a home in Switzerland, it can be helpful to remember that the process helps retain the long-term attraction of the country from a property perspective. In essence, authorities maintain a stronghold over who can buy in the country, which allows Switzerland to retain its safety and privacy record, which is part of why the country is so popular in the first place. The process also means Swiss resorts maintain their charm, uniquely Swiss feel, and a thriving local population. In turn, this ensures the longevity and enduring magnetism of mountain resorts. There are unlikely to be significant challenges for most foreigners that mean that you cannot purchase a holiday home in Switzerland. The approval process undoubtedly adds a layer of complexity, but in true Swiss style, you are likely to find that the Swiss authorities are pragmatic and helpful in your application.

Andermatt in the canton of Uri is a notable exception to the rules that restrict foreign ownership of Swiss holiday homes. You can buy property in the region as a foreigner without needing permission or a residence permit. Ownership in Andermatt is also free of most of the restrictions that would be applicable in other cantons under the Lex Koller regulations.

It's also worth noting that commissioning a new build as a foreigner can be challenging, even in the designated 'holiday' areas in which you are allowed to buy. Under Swiss law, construction of new second homes in towns or areas where more than 20% of properties are second homes is no longer allowed. If you want to purchase a property in some of Switzerland's better-known or more famous ski resorts, you'll usually find that this quota has already been hit. As a result, you'll generally need to consider purchasing an existing property if you wish to buy.

If you are foreign but live in Switzerland and have a residence permit, you can generally buy property anywhere in Switzerland as a non-Swiss citizen. Depending on your nationality (there are sometimes varying rules for EU/EFTA and non-EU/EFTA citizens even if you have a standard B or C permit), this leaves the door open to purchase secondary residences in Switzerland. As a result, you may also be able to build a property portfolio for investment purposes.  

Swiss Mortgage Interest rates are very attractive. Rates can be as little as 0.8%, rising to around 1.3% with an unlimited term, if more than 1% of the loan capital is paid back each year.

In essence, the Swiss mortgage interest rates you are offered will vary, depending on your situation. Whatever your circumstances, however, Enness will be able to secure very competitive financing for you. Rates will depend on your profile, assets and what you are willing to do or put forward to get the best deal. Private banks welcome dealings where you put forward assets for management by the bank, which in many cases will bring your mortgage rates down significantly. Other lenders will offer a mortgage in Switzerland "dry" – with no assets under management required as part of the agreement. Interest rates will vary on this type of transaction. While you may be offered a "better" interest rate if you put forward assets for management by the bank, you may not want to start a new banking relationship or have other reasons for preferring not to pursue this type of transaction. As always, Enness will work with you to ensure your mortgage in Switzerland meets all your requirements. 

If you are a foreigner buying property in Switzerland and don't plan to work in the country, some cantons will allow you to negotiate lump-sum taxation. Broadly speaking, if you are thinking of buying property as a foreigner in Switzerland, you will need to seek specialist advice on tax, permits and the other mandatory requirements that come with living and purchasing property in the country.

If you are a foreign national but are gainfully employed in Switzerland, your employer will usually be able to support you in applying for a residence permit as well as handling other administrative requirements. Depending on the type of residence permit you hold and your country of origin, you may be able to buy various kinds of property in Switzerland. However, you will also need to seek advice on taxation and other legal and fiscal considerations, especially regarding efficiency and reporting in your home country or other applicable jurisdictions. 

Professional services firms in Switzerland – as well as banks and other financial institutions – work very quickly. Used to serving high-net-worth individuals and high-profile clients, you will usually be able to get the answers and information you need quickly to be able to go ahead with purchasing Swiss property either as a non-Swiss resident or as a resident foreign national. With an office in Geneva and another in Zürich, Enness' team will be able to introduce you to relevant professional services firms who can advise you in Switzerland, if that is helpful.

When it comes to mortgages in Switzerland, Enness will create a bespoke mortgage vehicle for you. Your broker will work alongside you (and your advisors if necessary) to assess your situation and global assets. Enness aims to get you the most competitive mortgage in Switzerland while considering overall costs and tax efficiency.

The first port of call for high-value mortgages in Switzerland is often Swiss private banks. Very used to dealing with international clientele with global assets, Swiss banks are also used to the comparatively costly properties that are a standard part of the local landscape. They can also move apace with the speed with which property transacts in the country: the chains that are often found in the UK don't exist in Switzerland, for example.

Enness tailors every mortgage to each client, and there may be situations when a Swiss private bank isn't the right mortgage provider for you. Enness will negotiate terms with another of the 500 lenders in their network if this is the case. Other Swiss financial institutions may offer competitive financing, or other lenders – including private banks that don't operate in Switzerland – might be the best way forward.

Whatever you decide, you will get the best mortgage that is tailored to your situation and is structured in a way that is competitive regarding both rates and terms. Enness will also ensure you are offered an attractive mortgage in Switzerland that considers the broader facts of your situation: cost, security, terms, tax efficiency and the legal considerations that will be pertinent to you as a foreigner.

Enness understands the subtleties that come with operating in Switzerland. The French, Italian, Romansh and German-speaking areas of the country can be culturally different and often require different approaches to secure the best mortgage in Switzerland.

Although leading Swiss private banks have a presence all over Switzerland, to get the very best deal, you need access to the right team or department who might only operate in one of the main cities and not be present elsewhere. Enness' team in Switzerland has access to all parts of the market and all the key players who will understand your situation, circumstances and financing needs.