Swiss Mortgages for Non-Residents: How Lending Works for Foreign Buyers of Swiss Property

Last reviewed on 25 April 2026.

Buying Swiss property as a non-resident is the kind of thing that looks straightforward on a Sunday morning and complicated on Monday. The combination of the federal Lex Koller restrictions on foreign acquisitions, the two-pillar structure of a Swiss mortgage, the bank's affordability test, and the higher loan-to-value ratios that apply to non-residents means that a Swiss mortgage is not the same product a Swiss resident gets — even when the bank sign on the door is identical.

This page sets out the architecture: who is allowed to buy what, what loan-to-value (LTV) a non-resident can realistically expect, how a Swiss mortgage is split between a "first" and "second" mortgage with different amortisation rules, how the affordability test works in practice, and what to ask before starting. Specific terms vary by bank and canton; figures here are typical market practice rather than guarantees.

Lex Koller: who is allowed to buy

Lex Koller — formally the Federal Act on the Acquisition of Real Estate by Persons Abroad — is the federal law that restricts foreign acquisition of certain Swiss residential property. Any Swiss mortgage discussion for a non-resident starts here, because the bank cannot lend on a property the buyer is not legally allowed to acquire.

The system is permission-based. Cantons receive an annual quota of permissions for the sale of residential property to non-residents, mostly allocated to designated tourist regions. A foreign buyer typically needs:

• A property located in a canton and municipality that has Lex Koller capacity for that year.
• Use as a holiday home, with statutory limits on size and on minimum and maximum periods of ownership before resale.
• Cantonal authorisation issued before completion of the purchase.

Outside the holiday-home channel, the main exceptions for residential property are:

• Principal residence for non-residents who actually relocate to Switzerland and live in the property as their main home (typically with a residence permit and a real centre of life in Switzerland). The "live there yourself" requirement is enforced.
• EU/EFTA nationals legally resident in Switzerland, who are mostly treated as Swiss for the purposes of acquisition.
• Commercial property, which is generally not subject to Lex Koller — offices, hotels and similar are open to foreign acquisition under the standard property regime.

Buying-vehicle structures (foreign companies, trusts, holding entities) are scrutinised under the same regime; using a corporate wrapper does not turn a residential acquisition into a commercial one.

The two-pillar Swiss mortgage

A Swiss mortgage on a residential property is normally split into two parts:

• The first mortgage — typically up to 65% of the property's value — is interest-only and does not need to be amortised. It can in principle be carried indefinitely, refinanced at maturity, or repaid voluntarily.
• The second mortgage — typically the slice from 65% up to the maximum LTV — must be amortised down. For owner-occupied property, Swiss banking practice requires the second mortgage to be repaid within 15 years or by retirement age, whichever is earlier.

This structure is one of the reasons Swiss household mortgage debt looks unusually high in international comparisons: the first mortgage rarely gets paid down, by design. For a non-resident the structure is similar, but with materially lower maximum LTVs and stricter amortisation.

LTV for non-residents

A Swiss resident buying a primary home can typically borrow up to 80% of the property value, subject to affordability. For non-residents, the picture is tighter:

• Holiday homes are commonly financed at maximum LTVs in the range of 50–60%, often nearer 50% for properties at the high end of value, in remote locations, or with weaker resale liquidity.
• Investment property (rental apartment buildings, let-out chalets) is usually capped at around 65–70%, with banks pricing in vacancy assumptions and scrutinising the rental yield.
• Principal residences for newly relocated non-residents sit somewhere in between; banks treat the relationship as new and tend to be conservative until residence and income flows are established.

Two practical implications: the down-payment requirement for foreign buyers of a Swiss holiday home is typically 40–50% of the purchase price (plus transaction costs of around 5%), and the bank's valuation rather than the price actually paid sets the LTV ceiling. If the bank's valuer comes in below the negotiated price, the deal absorbs the difference in cash, not in additional borrowing.

The affordability test

Swiss mortgage affordability is computed using a stress-tested rate, not the rate the borrower will actually pay. The bank assumes:

• An imputed mortgage interest rate of around 5% (the long-run average — banks vary slightly), regardless of current market rates.
• Maintenance and ancillary costs of around 1% of the property's value per year.
• Required amortisation on the second mortgage, scheduled within the timetable described above.

The total of these three components must not exceed roughly one-third of the borrower's verifiable annual income. The conservative imputed rate is the part that surprises foreign buyers most: even when current market rates are 1–2%, the affordability test is computed at 5%, and a borrower who passes at the actual rate may still fail at the stressed rate.

Worked example

Consider a non-resident couple buying a CHF 2.5 million chalet in Valais as a holiday home, with a 50% LTV.

• Mortgage amount: CHF 1.25 million.
• Imputed interest at 5%: CHF 62,500 per year.
• Maintenance at 1% of property value: CHF 25,000 per year.
• Second-mortgage amortisation: the slice from 65% to 50% does not exist in this case (LTV is below 65%), so no compulsory amortisation. The whole CHF 1.25 million can be structured as a single first mortgage.

Total imputed annual cost is CHF 87,500. To pass the affordability test, the couple must be able to demonstrate verifiable annual income of around CHF 262,500 — three times the imputed cost. Banks accept structured solutions where the income test is satisfied through investment income from a custody portfolio held at the same bank, but they want to see the income evidenced over time, not simply asserted.

If the same couple had targeted a 70% LTV (CHF 1.75 million), the deal would have included a second-mortgage slice from 65% to 70%, requiring scheduled amortisation, and the affordability test would have been correspondingly higher.

Pillar 3a and pension-fund money

Swiss residents commonly use pillar 3a balances or vested-benefits accounts as part of the down payment for a primary residence. For non-residents this is largely not relevant — the regime is tied to Swiss residence and Swiss employment — but it matters in two situations:

• An expatriate already working in Switzerland with a Swiss occupational pension can sometimes use part of the second-pillar balance for a first owner-occupied home, subject to the rules of their pension fund.
• A returning Swiss national may have vested benefits and pillar 3a balances available; the rules are stricter than for active employees but not zero.

For pure non-residents buying a holiday home, the down payment is cash from outside Switzerland, with the same source-of-funds documentation that the account-opening guide describes.

Currency choice on the mortgage

Swiss banks normally lend in Swiss francs against Swiss property, regardless of the borrower's home currency. That is by design — pre-2008 episodes of foreign-currency mortgages on Swiss property created enough trouble that banks actively avoid it. The implication for a non-resident borrower is that the mortgage payments are a CHF liability, even if the borrower's income arrives in EUR or USD. That FX exposure is part of the cost of owning Swiss property as a foreigner; it is not avoidable.

Which banks lend

Roughly speaking, three categories of bank are active in this segment:

• Cantonal banks in tourist regions (Valais, Graubünden, Vaud, Ticino) are the most common providers for holiday-home loans to non-residents. Local market knowledge is concentrated here, and many of the workable Lex Koller transactions go through them — see the relevant profiles in the cantonal banks section.
• Universal and private banks with an existing wealth-management relationship will frequently extend a mortgage as part of a broader client package, particularly when the borrower's investable assets are also held there. For these banks, a Swiss mortgage is often an accommodation product rather than a stand-alone offering — see universal banks and private banks.
• Specialised mortgage providers and brokers exist but are less common in the foreign-buyer segment than in the resident market; pricing for non-residents is dominated by the relationship banks above.

Common mistakes

• Signing a sale contract before checking Lex Koller capacity. Cantonal authorisation is a precondition. A pre-existing sale contract without that condition is a structural problem, not a paperwork one.
• Underestimating transaction costs. Land-transfer tax, notary fees and registration costs typically add around 5% of the purchase price in cash, on top of the down payment.
• Assuming the affordability test reflects current rates. It does not. It reflects the long-run imputed rate.
• Treating the bank's valuation as a formality. A valuation that comes in below the contract price compresses the loan, not the bank's appetite. The buyer absorbs the gap in cash.
• Forgetting the imputed-rental-value income tax. Owner-occupied Swiss property generates an imputed rental value that is added to the owner's taxable income, with mortgage interest deductible against it. The interaction is benign only if the planning is done in advance.

Practical checklist before you start

• Confirm with a local notary or specialist lawyer that the target property's canton and municipality have Lex Koller capacity for foreign acquisition this year.
• Get a written indicative term sheet from at least one bank — typically a cantonal bank in the property's canton — covering LTV, affordability assumptions and amortisation.
• Check that you can demonstrate the income required by the affordability test using documentation a Swiss bank will accept (audited accounts, brokerage statements, pension or annuity statements).
• Plan for a CHF-denominated liability. Understand how that fits with your overall CHF exposure and any wider Swiss banking arrangement.
• Build in transaction costs and ongoing maintenance — together a meaningful percentage of price each year.
• Coordinate the mortgage application with the rest of your Swiss banking onboarding. Banks dislike doing one product in isolation; using the same institution for the everyday account, the custody portfolio and the mortgage is generally simpler.

Done well, a Swiss mortgage for a non-resident is a long-running, low-stress arrangement: an interest-only first mortgage that lives on the bank's balance sheet for decades, secured against a stable asset in a stable jurisdiction. Done poorly — without legal clearance, without an affordability cushion, without alignment with the rest of the borrower's banking — it is the most regrettable kind of foreign property purchase.