How to save money in living in Zurich – Europe’s most expensive city

Zurich has once again been named Europe’s most expensive city, but you don’t have to flash the cash – here are our top tips for saving money.

How to save money in living in Zurich - Europe’s most expensive city
Photo: Zürich Tourism/Rubiano Soto
Eat out for less
While cooking at home is always the cheaper option, there’s no need to forego dining out completely. Try Äss Bar in Zurich old town, which sells coffee and sandwiches starting at 2.50 francs thanks to its concept of using baked goods ‘fresh from yesterday’. 
The department stores are also worth a try. “Jelmoli and Globus have lovely top-floor restaurants that offer a good view and great value for money thanks to being self-service,” says local yoga teacher Susan Andreou. 
If you like to eat out regularly, the Easy Dining app, which costs 95 francs per year but offers a free trial, claims to cut your bill by half with its discounts at restaurants across the canton. Zurich resident Raquel Luzi Steiner says: “I've been using it for two years now and it's great. It pays for itself after two restaurant visits.”
Buy second hand

There are many place to buy secondhand in Zurich. Photo: Zürich Tourism/Elisabeth Real
Nothing beats crossing the border to find bargains on clothes. However, Zurich has an excellent secondhand scene, allowing you to source desirable pieces for a snip of the cost.
Tsitaliya Mircheva, who founded the fashion and style website Mums in Heels, says: “I got my hands on a limited edition Stella McCartney, an almost new Bally bag and some classic pieces in perfect condition for really reasonable prices.” 
Her favourite place to find bargains is the Burkliplatz market on Saturdays from May to October, but other good options include Flohmarkt Kanzlei, Switzerland’s largest year-round flea market, and Razzo 2nd Hand, an all-round shop in the city centre. 
A helpful guidebook to secondhand outlets is Nicht Neu.
Leisure for less
Great days out don’t have to cost a fortune. The Wildnispark Zurich, a leafy space between the Sihlwald Forest and Langenberg, is home to 16 species of animals, including bears and bison, and costs just six francs for adults or 14 francs for a family ticket – a fifth of the price of Zurich Zoo. 
Meanwhile, adults and kids alike will be fascinated by the earthquake simulator at Focus Terra, a free-entry museum dedicated to geology. Or why not take up a hobby that will save money down the line? Veg and the City offers beginners urban gardening classes starting at 95 francs.
Go local for groceries
Which brings us to saving money on household essentials. Carina Scheuringer, founder of Switzerland’s travel and leisure magazine Spot, recommends looking for the best quality-to-cost ratio locally. She says: “I try to support the local economy where possible. I like shopping at local farms, farmers’ markets or picking up local produce in places like Farmy, an online farm shop.” 
She adds that [email protected] regularly offers attractive deals that can be very cost effective.
Get active on the cheap

Photo: Per Kasch/Swiss Image
There’s nothing much cheaper than going for a walk, and Zurich boasts miles of hiking trails, whether you fancy a gentle lakeside stroll or a panoramic Nordic walking session. 
Meanwhile, in summer, some lakeside Badis offer free entry – among them, the Katzensee north of the city has a picturesque sunbathing meadow in a nature reserve. 
Fitness classes don’t have to cost the earth, either. It can help to look for independent teachers out of the city centre. For example, Susan Andreou’s Move Body Mind in Kloten Balsberg and Uster offers yoga and trampolining starting at 180 francs for 10 classes.   
Share books
The price of books in Switzerland never ceases to shock. But thankfully Zurich has excellent secondhand bookshops including Bücher Brocky, which sells paperbacks from two francs and hardbacks from five francs. 
Alternatively, try public library Pestalozzi Bibliothek, which offers books in 11 languages and costs the price of a couple of paperbacks for a year’s membership, or the English Book Swap Zurich, which meets once a month to get a “regular influx of fresh reads without paying a rappen”.   
Plan your travel ahead

Use your Halbtax or grab a RailAway deal for a day trip to the Rhine falls. Photo: Beat Mueller/Swiss Image
Purchasing an annual Halbtax pass brings the best economy when travelling in Zurich, but keep an eye out for special deals too. RailAway Kombi offers up to 50 percent discount on day trips by public transport, while municipality day train passes are another economical option. 
“For around 45 francs (prices vary), you get one full day of unrestricted travel on the entire SBB, RhB and PPT networks as well as several local networks,” says as Spot Magazine’s Carina. She warns that the number of passes available are restricted and there is usually an online reservation system, so it is important to plan ahead.
Don’t forget the free stuff
And don’t miss everything that is available for free. You can help yourself to water – Zurich has around 1,200 clean-water fountains; visit Zurich University’s Botanical Garden, which houses some 9,000 species of plants; and hire bikes through the Züri Rollt scheme, which simply requires a 20 franc deposit.
This article was first published in 2017

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EXPLAINED: Why not paying off your mortgage in Switzerland can save you money

The idea is strange to most of us, but the majority of people in Switzerland choose not to pay off their mortgage - and save money in the process.

EXPLAINED: Why not paying off your mortgage in Switzerland can save you money

Many of us who have been raised with the goal of one day owning property will have one thing on our mind as soon as that deal is done: pay it back. 

From avoiding credit rating issues to not seeing the erosion of our hard-earned money due to interest, there are a number of reasons we want to get out of mortgage debt as fast as possible. 

But in Switzerland, due to a variety of factors, it sometimes makes more financial sense not to pay off your mortgage – or at least to pay off less than you can afford to. 

Estimates vary, but statistics show that a majority of Swiss do not pay their mortgage off before retirement. 

Not only that, but Switzerland has the highest mortgage debt per capita of any country anywhere in the world, according to OECD figures. 

READ MORE: Buying property versus renting in Switzerland: What is actually cheaper?

Here’s what you need to know. 

Why would you not want to pay your mortgage off in Switzerland? 

There are a number of factors which contribute to Switzerland’s unique framework when it comes to mortgages. 

These include the country’s wealth tax, the dual system of mortgages and traditionally low interest rates. 

At this stage, it is important to mention that while a majority of people don’t pay off their mortgage during their working life, this does not mean they skip out and run for the Caymans upon retirement (although presumably some do). 

Instead, it means people are not actively paying off their principal, but investing the funds in an account with their bank. 

When they retire, they use the money in the account to pay off their mortgage debt – and keep the change. 

This sounds complicated because it is – and is explained at length below. 

For more information on buying property in Switzerland, check out this link. 

The Swiss mortgage system: Dual obligations

The reason you may not want to pay your mortgage off in full in Switzerland is partially because of the unusual structure of mortgage obligations. 

The Swiss mortgage system differs from that in most countries in that you effectively take out two mortgages when you buy a property, or more accurately, the mortgage is split into two mortgage obligations. 

The first obligation resembles a traditional mortgage seen abroad, in that it has an indefinite repayment period and covers the majority of the purchase price. 

This will usually be around 60 percent of the total purchase price, less the deposit and the amount included in the second mortgage obligation. 

The second will cover approximately 15 percent of the purchase price. 

Importantly, this will have a fixed repayment period, usually around 15 years (at around one percent per year) or by the time you retire (if shorter than 15 years). 

EXPLAINED: How to save on your mortgage in Switzerland

While you must pay off this amount, the ‘optional’ part relates to the other component of the mortgage. 

Mortgage rates in Switzerland are low by international standards. Photo by PhotoMIX Company from Pexels

Should you choose direct or indirect amortisation? 

Amortisation is an accounting term which refers to reducing the book value of a loan or debt, but basically means paying off your mortgage. 

In most countries, the only option is ‘direct amortisation’, which means paying money to the bank to cover your debt. 

Direct amortisation not only reduces the debt, but the interest (as the interest is based on the quantum of the debt). 

Indirect amortisation is something relatively peculiar to Switzerland and is where the idea of not paying off your mortgage comes in. 

Finding a flat in Switzerland: How to stand out from the crowd

Swiss financial advice site Beobachter points out that the system in Switzerland is effectively set up to allow long-term non-repayment of mortgages. 

“In hardly any other country are the amortisation standards as lax as in Switzerland… In no other national economy can debts remain “forever” in this way”, they explain.

Instead of paying off the mortgage directly, you make regular payments into a ‘third pillar’, which is basically an investment account or fund offered by the same bank. 

This money is then used as a security against the property. 

Keep in mind the amount you need to repay will be the value of the property when you bought it, not the value of the property when you retire. 

During this time you will continue to pay interest on the debt.

This interest will not decrease as you are not paying off the principal, although Switzerland’s low interest rates make this an attractive option. 

Eventually, the debt will be taken from the third pillar. Usually, this will happen when you retire, but you can also sell the property, organise some form of reverse mortgage or sell it to your kids and have them rent it to you, among other options. 

Why is this beneficial?

The main reason this is advantageous is for tax purposes.

In Switzerland, you can deduct mortgage payments from your tax. Also, the money you pay into a third pillar is not taxable. 

Another major reason is the country’s wealth tax, which is not as unique but still relatively uncommon. 

Property: Why you can be taxed four times over for owning a home in Switzerland

In most countries, you pay tax primarily on your income. In Switzerland, you are liable to be taxed on your total wealth as well (under one percent per year). 

The wealth tax is calculated by your total assets minus your total debts. If you have significant debts – including a mortgage – then this will reduce your wealth tax. 

Importantly, the money in your third pillar does not count towards your wealth tax. 

Look, I just clicked on this article to find out about my mortgage, can you speak English please? 

While this all sounds incredibly complicated and you are advised to seek the support of a licensed agent, the calculus is relatively simple. 

Calculate the amount you would pay if you invested the money in a third pillar – keeping in mind the tax savings – by the end of the mortgage, minus the interest payments and the mortgage principal upon retirement. 

Compare this to the amount it would cost you to pay off the mortgage completely, including interest payments, keeping in mind that your tax savings will decrease over time as your regular payments decrease as you pay more of the mortgage off. 

Generally speaking, your financial advisor will present this to you as comparable percentages over time, which means your income will be a major factor in your final decision, as will your retirement plans and the tax rate in the canton and municipality you live in. 

EXPLAINED: How where you live in Switzerland impacts how much income tax you pay

It is important to note that your bank is likely to offer a combined form of both direct and indirect amortisation, which will allow you to spread the risk/burden somewhat. 

Editor’s note: Please keep in mind this report is intended as a guide only and should not replace legal and financial advice from a qualified agent or advisor.