What is a mortgage – and how do I know if I can actually afford one?

A mortgage is a long-term loan used to finance residential property. The loan is secured against the property itself. While it may sound simple in theory, in practice it raises many questions – especially if it’s your first time dealing with the topic.

Maybe you’ve been thinking about buying a home for a while. Maybe you’ve had a promotion, you're expecting a child, or you're just tired of paying rent. But the moment you start digging into financing, you’re hit with terms like “affordability”, “amortisation” and “loan-to-value ratio”.

And let’s be honest: for many people, these words feel like a wall. But it’s exactly at this point that smart decisions matter most. This article breaks things down in plain English – how mortgages in Switzerland work, what types are available, and how to assess whether financing suits your life.

How does a mortgage work in Switzerland in simple terms?

In Switzerland, banks typically finance up to 80% of a property's value through a mortgage. The remaining 20% must come from your own equity. But not all equity is treated equally. At least half of it must be from so-called “hard” assets – like savings, securities, or your 3a retirement account. Pension fund money (2nd pillar) can only be used in part.

What does that look like in numbers? If you're buying a property worth CHF 1'000'000, you’ll need at least CHF 200'000 in equity. Of that, at least CHF 100'000 must come from sources other than your pension fund. If you rely entirely on your 2nd pillar, you'll hit a wall fairly quickly.

What is affordability and why does it matter?

Many buyers do a quick check of their monthly expenses and think, “I can manage that.” But banks apply stricter standards. They calculate conservatively – not to make life difficult, but to ensure your financing can hold up even if interest rates rise.

Affordability refers to whether you can cover the ongoing costs of owning a home over time. These include mortgage interest, repayments (amortisation), and operating costs like maintenance. A general rule: these costs should not exceed one-third of your gross annual income.

And here’s the key detail: banks don’t calculate using today’s interest rate – even if it’s 2%. They typically use a rate of around 5%. That’s a built-in buffer in case the market shifts. They’ll also estimate maintenance at 1% of the property’s value and include the cost of repaying the second mortgage.

To get a clearer idea of what’s realistic, digital tools are your friend. Mortgages calculators like the one on moneyland.ch let you simulate different mortgage scenarios – covering interest, amortisation, and affordability – with just a few inputs. A helpful first step before you contact a bank or advisor.

What types of mortgages are there – and which one suits me?

The classic fixed-rate mortgage offers interest rate stability: the agreed rate stays the same throughout the term – usually between five and ten years. This means you know exactly what your financial commitment will be, regardless of how interest rates move. Ideal for anyone who values stability and long-term planning.

Different to this is the SARON mortgage: the interest rate here is directly linked to the money market and adjusts regularly. This can be cheaper while rates are low. But if they rise suddenly, it can get expensive. If you go for this model, you’ll need a solid financial cushion and should keep a close eye on interest rate developments.

A third option is the variable-rate mortgage. It offers maximum flexibility but usually comes with a higher interest rate. In practice, it’s rarely used as a long-term solution – more often as a temporary option, for example if you're planning to sell the property soon.

Many people today combine two models – for example, 70% fixed-rate and 30% SARON – to strike a balance between security and flexibility. The right combination depends heavily on your financial situation and how much risk you’re comfortable taking.

How does repayment work, and should I amortise directly or indirectly?

Once your mortgage is in place, you’ll need to repay the second mortgage over time. There are two ways to do this: directly or indirectly.

Direct amortisation

You pay a fixed amount back to the bank every year. Your debt decreases steadily, along with your interest payments. But there’s a catch – the lower your debt, the less interest you pay, which reduces your tax deductions.

Indirect amortisation

Here, you pay into a tied pension product – like a 3a account – instead of repaying the bank directly. This account is pledged to the bank and used to pay down the loan at a later point. The advantage? Your debt remains unchanged during the term, so your interest (and tax deductions) stay higher. Plus, you build up pension savings.

Many choose the indirect route – especially when tax savings are a priority.

How can I find the best mortgage rate without visiting five banks?

Here’s the good news: the mortgage market is more transparent than ever. And the differences between offers can quickly add up to thousands of francs a year.

Comparison platforms like comparis.ch or moneyland.ch help you check current rates across providers. But the lowest rate isn’t always the best deal. It depends on your income, your timeline, and your financial setup.

That’s where Alpian x Resolve comes in. Our digital mortgage service combines the independence of a broker with personal advice. Enter your information once – and get offers from over 70 lenders. No paper trail. No repeated meetings. All in your Alpian app.

Get your mortgage with Alpian & Resolve – step by step

At Alpian, we don’t offer our own mortgage products. And that’s intentional. Instead, we’ve partnered with Resolve – one of Switzerland’s top independent, FINMA-registered mortgage brokers.

In 2024 alone, Resolve arranged nearly CHF 900 million in mortgage volume. This makes them one of the most experienced players in the country. Our shared goal? To help you find the mortgage that truly fits your life – financially viable, tax-optimised, and future-proof.

Here’s how to get started with Resolve via Alpian:

Open your Alpian app
Go to the Partner Companies section in the menu
Under Financing & Housing, tap on Resolve
Click Request Consultation and fill out the short form

Resolve will contact you directly with personalised offers

Important: You’ll only get access to the exclusive benefits of this partnership if you go through the Alpian app.

Open your free Alpian account now – and access exclusive premium benefits.

What mistakes should I avoid when taking out a mortgage?

Don’t sugarcoat your calculations. Many people focus only on today’s interest rate. But banks use higher figures – and life changes, like starting a family or approaching retirement, can reduce your income.

Don’t forget the maintenance costs. Heating, upkeep, repairs – these costs pop up every year and vary depending on the property. If you ignore them, you’re setting yourself up for unpleasant surprises.

Don’t skip the comparison step. Settling for the first offer – out of habit or lack of time – can cost you. Taking a little time to compare or working with a service like Resolve can pay off significantly.

What does a mortgage actually cost and how do I calculate it?

Let’s break it down:

You buy a property for CHF 1'000'000. You bring CHF 200'000 in equity and take out a mortgage of CHF 800'000. You choose a fixed-rate mortgage at 2.5%, which means about CHF 20'000 in interest per year. Add CHF 10'000 in running costs and – if you choose direct amortisation – around CHF 8'700 in repayments.

Your total annual cost: CHF 38'700, or about CHF 3'225 per month. That’s manageable if your gross household income is at least CHF 120'000.

But the bank calculates using a theoretical 5% rate. That brings your calculated annual cost to around CHF 58'000 – meaning your income should be closer to CHF 180'000 to meet affordability requirements.

Bottom line: A solid budget, conservative assumptions, and smart comparison tools are essential – not optional.

Conclusion: So, what does all this mean for you?

A mortgage isn’t just a product. It’s a commitment. One that needs to fit your life, your plans, and your financial reality.

When you buy a home, you want more than a good rate. You want to feel confident. That comes from understanding what you’re signing up for – and from having support that’s actually helpful.

That’s exactly what Alpian and Resolve offer: a digital, independent, and efficient path to the mortgage that works for you. For those who want to save time – and avoid expensive mistakes.

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