Swiss Mortgages: SARON vs Fixed-Rate, Pension Withdrawals & Buying Process

Buying property in Switzerland is a marathon: high prices, strict affordability rules, and two competing mortgage philosophies. This is the practical guide.

Affordability rules: 20% + 33%

• Down payment of at least 20% of the purchase price, of which at least 10% must come from non-pension assets (savings, gifts, securities, Pillar 3a).
• Total housing cost ≤ 33% of gross income, calculated at an imputed rate of 5% (not the actual rate), plus 1% maintenance and 1% amortisation on the second mortgage.
• The second mortgage (the part above 65% LTV) must be amortised within 15 years or by retirement.

SARON vs fixed-rate

SARON is the daily Swiss money-market rate (successor of CHF Libor). A SARON mortgage resets every 1 or 3 months — you pay roughly the SARON compound + a margin (usually 0.7-1.0%).

Fixed-rate mortgages lock the interest for 2 to 15 years.

	SARON	Fixed
Cost in low-rate cycles	Cheapest historically	Higher
Cost in high-rate cycles	Painful	Locked & predictable
Early exit	Easy at reset	Penalty (often steep)
Best when	Stable income, can absorb shocks	Tight budget, long horizon

A common Swiss approach is to split: e.g. 50% on a 10-year fixed and 50% on SARON, balancing predictability and flexibility.

Using Pillar 2 and Pillar 3a for the down payment (WEF)

Under the Wohneigentumsförderung (WEF):

• You can withdraw or pledge Pillar 2 (BVG) and Pillar 3a savings to buy your primary residence.
• Withdrawal triggers a one-off lump-sum tax (cantonal) but lets you reach the 20% down-payment.
• Pledging avoids the tax and keeps full retirement savings working — but raises the loan balance.
• Minimum withdrawal CHF 20,000; from age 50 limited to half the balance or the value at age 50.

Buying process — step by step

1. Pre-approval from your bank or a broker — confirms the loan amount you can carry.
2. Property search across Homegate, ImmoScout24, Comparis, plus local agents.
3. Due diligence — building condition, easements, land register, tax value, planned construction nearby.
4. Reservation contract with a small deposit.
5. Final mortgage offer — compare at least 3 lenders. Brokers like MoneyPark, Hypoplus or Resolve typically beat single-bank offers.
6. Notary signing — the public deed is signed at the cantonal notary; transfer fees vary by canton (0.5-3%).
7. Land register entry & WEF withdrawal — pension funds typically pay directly to the notary's escrow.

Track your mortgage rate, amortisation schedule, and remaining loan-to-value alongside your accounts in Finch — and get reminders before each fixed-rate expiry.