Mortgage for expats in Switzerland (permits B, C)

Buying real estate in Switzerland as an expat or cross-border worker is entirely possible, but the conditions are more demanding than for Swiss citizens. Increased equity requirements, legal restrictions, and specific bank criteria: this guide covers the rules and strategies for making your property project a success.

The legal framework: who can buy in Switzerland?

Property acquisition by foreign nationals is governed by the Lex Koller (Federal Act on the Acquisition of Real Estate by Persons Abroad). This Swiss law restricts property purchases by non-residents to protect the domestic real estate market. The rules differ according to residency status:

C permit (permanent residence)

C permit holders enjoy the same rights as Swiss citizens regarding property acquisition. No particular restrictions apply, whether for a primary residence, secondary residence, or investment property.

Regarding the mortgage, conditions are also identical: minimum 20% equity, of which at least 10% in "hard" equity (savings, pillar 3a, gifts -- excluding 2nd pillar). Affordability is assessed under standard criteria.

B permit (annual residence)

B permit holders can purchase their primary residence without special authorization, provided they actually live in it. Buying a secondary or investment property is subject to authorization and generally refused.

Specific mortgage conditions:

• Increased equity: 25% to 30% depending on the bank (versus 20% for C permit holders or Swiss citizens)
• Higher "hard" equity share: Some banks require 15% to 20% in personal savings, limiting the use of the 2nd pillar (LPP/BVG)
• Foreign currency income discount: 10% to 20% reduction on income not denominated in CHF
• Employment stability: An indefinite employment contract is generally required
• Minimum duration of stay: Some banks require 1 to 2 years of residency in Switzerland

G permit (cross-border worker)

Cross-border workers with a G permit can acquire property in the border zone of their workplace, provided they establish their primary residence there and leave Switzerland at least once a week (under bilateral agreements).

Restrictions and conditions:

• Acquisition limited to the border zone of the workplace
• Primary residence only (no investment property)
• Equity of 25% to 30%, mainly in "hard" equity
• Euro-denominated income subject to a 15% to 20% discount
• Limited number of banks accepting cross-border worker applications

Non-EU/EFTA nationals

For nationals of non-EU/EFTA countries, acquisition is subject to additional restrictions. A B or C permit is essential, and banks generally apply the strictest criteria. Specialized guidance is strongly recommended.

Equity: increased requirements

The main difference for expats lies in the increased equity requirements:

For a property worth CHF 1,000,000, a B permit holder will need CHF 250,000 to 300,000 in equity, compared to CHF 200,000 for a Swiss citizen. This significant difference requires rigorous financial planning.

Accepted sources of equity

• Personal savings: Bank accounts in Switzerland or abroad (the bank may request proof of the origin of funds)
• Pillar 3a: Accepted for primary residence, if the account is domiciled in Switzerland
• 2nd pillar (LPP/BVG): Withdrawal possible for primary residence, but some banks limit its use for expats
• Family gift: Accepted with proof of origin of funds
• Sale of property abroad: Proceeds can serve as equity, subject to documentation

Exchange rate risk

For expats and cross-border workers earning income in foreign currencies (EUR, USD, GBP), exchange rate risk is an important factor:

• Mortgage charges are in CHF, while income is in foreign currency
• An appreciation of the Swiss franc reduces the purchasing power of foreign income
• Banks apply a 10% to 20% discount on foreign currency income to account for this risk
• Some banks offer mortgages in foreign currencies (EUR), but rates are generally less favorable

Currency hedging strategies exist (forward contracts, currency options) but they entail additional costs. For cross-border workers whose contract is in CHF, this risk does not apply.

Specialized banks and brokerage

Not all banks are equally receptive to expat applications. The differences are notable:

• Cantonal banks: Some are open to B permit holders but with strict conditions. Their knowledge of the local market is an asset.
• Major national banks: Generally open but with standardized processes that can be rigid for atypical profiles.
• Specialized banks: Certain institutions specifically target international clients and offer adapted conditions (documentation in English, flexibility on foreign currency income).
• Insurance companies: Often more flexible on acceptance criteria but with slightly higher rates.

Using a mortgage broker is particularly recommended for expats. The broker knows the specifics of each institution and can direct your application to the banks most likely to accept it, saving considerable time and avoiding multiple rejections.

Specific steps for expats

1. Verify your acquisition rights: Check the Lex Koller provisions and conditions linked to your permit
2. Build your equity: Gather the required savings and prepare proof of origin
3. Obtain a pension statement: From your pension fund (if applicable) for potential LPP withdrawal
4. Prepare the documents: Residence permit, employment contract, payslips, tax assessment, bank statements
5. Consult a broker: To identify suitable banks and negotiate the best conditions
6. Plan for the notary: The notary will verify your acquisition rights and formalize the transaction

Swiss citizens living abroad

Swiss citizens residing abroad can buy freely in Switzerland (no Lex Koller restrictions). However, mortgage conditions are similar to those for expats: increased equity (25%), foreign currency income discount, and limited number of partner banks. A tax obligation in Switzerland (tax return for the property) is mandatory.