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PROPERTY

Can foreigners apply for (and get) a mortgage in Switzerland?

If you are a foreign national and want to buy property in Switzerland, you may be wondering whether you are eligible for mortgage. The answer depends on several factors.

Can foreigners apply for (and get) a mortgage in Switzerland?
Depending on your passport, you may need permission to apply for a Swiss mortgage. Image by Randy Jost from Pixabay

The most important condition for being able to obtain a Swiss mortgage is your residency status. So the question should be not whether you qualify for a mortgage but, rather, if you can purchase property in Switzerland in the first place.

Logically, if you are allowed to buy a house or an apartment in Switzerland, then you can apply for a mortgage as well.

Who can and can’t buy a house / get a mortgage?

A citizen of an EU / EFTA state can freely purchase real estate (home or land) in Switzerland. This applies to both primary residence and holiday homes.

The same is true for third-country citizens, say US or UK nationals, who have a valid permanent residency B or C status — there are no restrictions placed on them either.

However, rules are in place for people from outside Europe who don’t have either of the two above-mentioned residency permits.
They will need a permission to purchase housing in Switzerland — a measure intended to prevent Swiss properties from falling into foreign hands.  

Additionally, they can only buy a house which will be used as the primary residence — this means that they can’t buy it as an investment and rent it out.

And if you are a cross-border worker in Switzerland (G permit), you can buy a second home in the vicinity of your  place of employment without authorisation. However, you are not allowed to rent out this property for as as long as you work in the region as a cross-border commuter.  

Conditions are even stricter if you a foreigner living abroad — rules for such purchases are set out in a law called Lex Koller and are quite complex.

Unless you are looking to buy holiday homes in Appenzell Ausserrhoden, Bern, Freiburg, Glarus, Grisons, Jura, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen, Schwyz, Ticino, Uri, Vaud and Valais, you will need a special permission as well.

READ MORE: ‘Lex Koller’: What are Switzerland’s rules for foreigners buying property?
 

Where can you ask for authorisation to buy a house?

If you are among those who need a special permission to own a house, you should apply for permission to cantonal authorities in the municipality where the property located.

Page 13 of this PDF document indicates contact addresses for each canton.  Officials will indicate what paperwork you need to submit for consideration of your case.

What about mortgages?

Needless to say, if your application is rejected, you will not be given a mortgage either.

If it is approved, then you can apply in pretty much the same way as Swiss citizens do, though you will be asked to provide additional documents, such as your work / residency permit, for example, along with the canton’s authorisation.

From then on, it is up to you and your financial abilities to choose the mortgage that suits you best from among several types available in Switzerland, such as SARON and LIBOR mortages, which are detailed here:

EXPLAINED: What is Switzerland’s ‘SARON’ mortgage?
 

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PROPERTY

How property and rental prices in Switzerland are rising

Buying a property in Switzerland is still getting more expensive every month, and rents are set to increase too.

How property and rental prices in Switzerland are rising

Property prices continue to rise in September in Switzerland, despite the end of the negative interest rate policy, the Swiss Real Estate Offer Index, jointly compiled by ImmoScout24, SMG Swiss Marketplace Group and Cifi, said.

“Strong demand for living space and limited supply are driving the Swiss real estate market, despite the end of the negative interest rate policy,” the study stated.

During the month under review, house prices rose by 0.8%, while the price of a flat increased by 0.2%.

READ ALSO: Is now a good time to buy property in Switzerland?

On the other hand, tenants looking for a flat are seeing basically the same prices as in August, since rents grew an average of 0.3 percent month on month, according to the index.

Rents should rise too

Immoscout24 said they expect rents to increase as demand soars with increasing migration levels to Switzerland.

“Due to the strong immigration in the current year, rents are likely to increase in the coming months. The increasingly scarce supply of flats also contributes to this assessment”, it said.

“According to the current vacancy census, around 60,000 flats were vacant in Switzerland on 1 June 2022, which is 10,000 fewer than the previous year.

READ ALSO: Where in Switzerland are you most likely to find flats for rent?

“The vacancy rate is 1.3 per cent”, explained Martin Waeber, Managing Director Real Estate, SMG Swiss Marketplace Group. “According to the official definition, there is, therefore, an overall housing shortage, although the situation varies regionally here as well,” he added.

Rental prices also vary regionally. Though the national average prices increased by 0.3 percent from the end of September compared to the month before, some regions saw rents soaring while others had prices going down.

READ ALSO: Where to find property in Switzerland for under CHF 500k

While the advertised values in Ticino (3.1 percent) and the Central Plateau (2.1 percent) have risen significantly, there are hardly any changes in Northwestern Switzerland (0.3 percent), the Lake Geneva region (0.3 percent) and Eastern Switzerland (0.2 percent).

In contrast, rents fell in central Switzerland (-0.7 percent) and in the greater Zurich region (-0.8 percent).

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