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Despite the constant rise in real estate prices in many cantons, the dream of buying a single-family home or a condominium remains. And even if the 20% rule is not about to end, it is still possible to become an owner without equity:

  • Thanks to pledging or withdrawing your 2nd and 3rd pillar, you can build your own funds.
  • A donation or an inheritance advance allows you to gather the 10% of real equity required by banks.
  • With rent-to-own, you have the possibility to convert part of your monthly payments into accumulated capital, which allows validating the mortgage financing after a few years.


How to finance a real estate purchase in Switzerland with 0 cash contribution?

In Switzerland, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss Bankers Association (SBA) set the rules regarding mortgage lending. Therefore, a lending institution can usually finance an object up to 80%. The remaining 20% constitutes your own funds.


Instead of depositing your cash directly, you have the option to pledge your pension assets (2nd and 3rd pillar) or your securities portfolios.


This security allows the bank to finance more than 80% of the value of the property while letting your capital grow with your institution. It is the ideal leverage to preserve your savings and insurance coverage while gaining property ownership.


Good to know: acquisition costs and transfer taxes (which range between 3% and 5% of the sale price in cantons such as Vaud or Geneva) can never be included in the mortgage debt. Unlike the price of the property, this amount must be paid in cash at the time of signing the deed.


What are the solutions for the mandatory 10% equity?

A problem you might encounter during the acquisition process: of the 20% equity required, at least 10% must not come from the 2nd pillar. Financial institutions indeed require “real” equity.
If you do not have these funds in a bank account, several solutions exist:


Inheritance advance

An inheritance advance is an advance on your future inheritance share granted by your parents or grandparents. For the mortgage lender, this amount counts as real equity, provided a written statement confirms that this sum is not subject to repayment during your lifetime.


Donation

This transfer of capital free of charge is final and does not need to be reported in the estate. It is a major leverage to reach the 10% equity threshold outside the pension plan, as the bank considers this contribution as a net increase of your wealth without any debt.


3rd pillar (A or B)

Savings accumulated in the framework of the tied pension (3A) or free pension (3B) are counted as real equity.


You can either withdraw these funds to pay for the property or pledge them to strengthen your security without affecting your current taxation.


Pledging a life insurance policy

If your insurance policy has a surrender value (amount available in case of cancellation), it can be pledged in favor of the financing institution. This increases your advance rate while keeping your risk benefits in case of death or disability.


Becoming a property owner without equity thanks to rent-to-own

Rent-to-own allows you to occupy a property while paying a monthly amount that combines rent and a blocked savings portion. This progressive accumulation of capital is then used to constitute the 20% equity required by banks.


After a few years, this accumulated savings allows validating the mortgage financing and officially becoming the property owner.


This model is ideal for profiles with strong savings capacity but who have not yet gathered the initial amount. It allows fixing the price of the condominium from the start, protecting the buyer from real estate inflation during the capital accumulation phase.


What income is required to obtain a mortgage without equity?

To become a property owner without significant equity, your income must be solid. The rule is simple: theoretical charges must not exceed 33% of the household’s annual gross income. The calculation is based on the following criteria:

  • Theoretical interest rate (or technical rate): Even if you obtain a real rate of 1.5% or 2%, the bank calculates your budget with a rate of 5%. This is a safety margin to ensure that you can always pay your installments if rates rise.

  • One-third rule: The total of your charges (theoretical interest + amortization + maintenance costs) must not exceed 33% of the annual gross income. This is the financial ceiling in Switzerland.

  • Mandatory amortization: The debt must be reduced to 65% of the property value (first rank) within 15 years, and at the latest by retirement age.


Becoming a property owner without capital: example of financing an 800,000 CHF property

Let’s take the example of a couple wishing to acquire a condominium for 800,000 CHF in the canton of Vaud:

  • Required equity (20%): 160,000 CHF

  • Of which real equity (10%): 80,000 CHF (contributed by a 3rd pillar and small savings)

  • Pledged portion (10%): 80,000 CHF LPP pledged (not withdrawn)

  • Total mortgage debt: 720,000 CHF (advance rate of 90%)

For this file to be approved by a cantonal bank or insurance, the charges are calculated as follows:

  • Theoretical interest (5% of 720,000 CHF): 36,000 CHF

  • Second-rank amortization: The debt must be reduced to 65% (520,000 CHF) within 15 years. Therefore, 200,000 CHF must be repaid over this period, i.e., 13,333 CHF/year

  • Maintenance costs (1% of the property value): 8,000 CHF

  • Total theoretical annual charges: 57,333 CHF

To comply with the one-third rule (33%), the household’s annual gross income must be at least 173,700 CHF.


Negotiating a mortgage with low equity requires careful preparation and knowledge of the Western Swiss banking network. At dreamo.ch, we help you optimize your 2nd and 3rd pillar and find the best solutions to make your property dream a reality.


Everything about acquiring property without equity

Can transfer taxes be financed with the mortgage?

Unfortunately, no. Notary fees and transfer taxes (cantonal tax) must be paid in liquid funds. They represent about 2% to 5% of the purchase price depending on your canton of residence.


Is LPP withdrawal recommended to buy without capital?

Yes, but beware: withdrawal reduces your future retirement pensions. Pledging is often preferred by advisors because it maintains your insurance coverage (disability/death) and the growth of your pension capital.


Does the 3rd pillar count as real equity?

Of course! Unlike the 2nd pillar, the 3rd pillar is accepted to cover the mandatory 10% tranche "outside LPP", which greatly facilitates the process.