How much can I borrow? The one-third rule explained

Swiss banks do not look at today’s rate to grant a loan: they test your affordability with a cautious theoretical rate.

The three usual criteria

• Own funds: at least 20% of the price, of which at least 10% in "cash" (i.e. outside the 2nd pillar);
• Theoretical costs: interest at 5%, maintenance at 1% of the value per year, amortisation;
• One third of income: these costs should not exceed about one third of gross household income.

Example

Property at CHF 1,000,000, loan of CHF 800,000 (80%):

• theoretical interest at 5%: CHF 40,000;
• maintenance at 1%: CHF 10,000;
• amortisation down to two thirds of the value (CHF 666,667) over 15 years: about CHF 8,900 per year;
• total: about CHF 58,900 per year, i.e. gross income of about CHF 176,700 required.

The actual rate paid is well below 5%, but the bank reasons in safety margin. Do not forget acquisition costs (often 3 to 5% of the price), to be funded from your own funds.

Our online simulator applies these rules and gives you an indicative purchasing power in minutes.

Usual bank rules, which vary by institution and canton. Indicative simulation.