Down payment

When buying a main residency in Switzerland, the minimum required down payment, according to the ASB guidelines (ASB = Association Suisse des Banquiers) is 20% of the purchase price, the first 10% not being able to come from your pension fund (Loi sur la Prévoyance Professionnelle, also called LPP). You will also need to budget an extra 5% in order to pay the closing costs, which can not be financed from your pension fund as well.

 

What does that means specifically ?

 

Let’s say you want to buy a property for CHF 1 mio.

 

It will be asked of you to come up with a minimum down payment of CHF 200k + the closing costs.

 

The first 10% of the down payment as well as the closing costs not being able to come from your pension fund (LPP), this is how the down payment could look like :

 

Cash / tax deductible and/or non tax deductible 3rd pillars / Donation (10%) : CHF 100k

 

LPP (10%) : CHF 100k

 

Closing fees (not from LPP) : CHF 50k

 

Total down payment : CHF 250k

 

If as of today you are not able to come up with this total, please refer to our article dedicated to the down payment to maybe find some alternatives.

 

Five elements to also consider:

 

  1. Any withdraw from your tax deductible 3rd pillar plan and/or LPP will generate taxes. This aspect needs to be taken into account when establishing your down payment.
  2. In some instances, the closing fees can be added to the purchase price. With that scenario, your requested down payment will be reduced. Let’s look back at our exemple of a buying price of CHF 1 mio :

Purchase price : CHF 1 mio + closing fees CHF 50k = CHF 1’050’000.-

Down payment

Cash / 3rd pillar plan(s) / Donation (10%) : CHF 105’000.-

LPP (10%) : CHF 105’000.-

Closing costs : CHF 0.- (already included in the purchase price)

Total down payment : CHF 210’000.-

  1. A very few mortgage providers accept that the totality of the down payment (20%) is made through your pension fund (LPP). The closing costs, however, will still need to be paid cash or through your 3rd pillar plans.
  2. Through our network, we are able to obtain mortgage loan approval with a down payment of only 10%
  3. ASB guidelines request that the first 10% of the down payment dont come from your pension fund. However, you can withdraw more than 10% from it. For a purchase price of CHF 1 mio, you could for exemple pay CHF 100k (10%) through cash/ 3rd pillar plans / Donation and CHF 200K through your pension fund.

 

Purchase of a vacation home and/or a investment property

 

In either cases, you will not be able to use your pension funds or your tax deductible 3rd pillar plans. The full down payment will need to be made out of cash and/or donation.

 

For those type of acquisitions, it will generally be requested that you come up with a minimum down payment of 25% of the purchase price + closing fees. Depending on the mortgage provider we are requesting a loan from, the down payment will range anywhere from 20% to 35%, not including the closing costs.

 

For a buying price of CHF 1 mio, the minimum down payment you can hope for will be of CHF 200k, not including the closing costs.

 

One element to take into consideration :

 

  1. In some instances, the closing costs can be added to the purchase price. With that scenario, your requested down payment will be reduced

 

This article might be of interest  : More or less equity ?

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