Affordability Analysis
Make sure your property remains affordable long term
What does affordability mean for mortgages?
Affordability is the most important criterion when granting a mortgage. It checks whether you can afford the ongoing costs of your property long term – even if interest rates rise.
Swiss banks don't calculate with the current interest rate but with a notional rate of 4.5-5%. Amortisation and ancillary costs are added on top. These total housing costs should be a maximum of 33% of your gross income.
Your benefits at a glance
Financial security
You can afford your home even if rates rise
Clear calculation
Transparent calculation of all costs
Future perspective
Accounting for changes in your life
Identify risks
Spot potential problem scenarios early
Bank acceptance
Optimal preparation for loan applications
Plan reserves
Financial buffer for the unexpected
In-depth knowledge
The affordability formula
The notional housing costs consist of:
1. Notional mortgage rate: 4.5-5% on the mortgage (not the actual interest rate) 2. Amortisation: 1% of the 2nd mortgage (the portion above 65% loan-to-value) 3. Ancillary costs: 1% of the property value per year
Example for a property worth CHF 1 million with a CHF 800'000 mortgage: - Notional interest: CHF 40'000 (5% of 800'000) - Amortisation: CHF 1'500 (1% of 150'000 above 65%) - Ancillary costs: CHF 10'000 (1% of CHF 1 million) - Total: CHF 51'500 per year
Required gross income: at least CHF 156'000 (51'500 / 0.33)
Equity requirements
Besides affordability, equity is decisive. In Switzerland the following applies:
At least 20% equity, of which: - At least 10% must be «hard» equity (savings, pillar 3a, advance inheritance, gifts) - A maximum of 10% may come from the pension fund (early withdrawal or pledge)
Important: An early withdrawal from the pension fund creates pension gaps that should be covered. A pledge is often the better solution, as your pension fund balance remains intact.
We analyse your asset situation and find the optimal equity structure.
Life stages and affordability
Affordability must work across different life stages:
Starting a family: Reduced income due to part-time work, higher expenses for children. Affordability should also work with a single income.
Career change: With self-employment or a job change, income can fluctuate. Reserves are essential.
Retirement: Retirement income is often 30-40% lower than earned income. Affordability must still be given at that point.
We calculate scenarios for all relevant life stages.
When affordability is tight
Affordability doesn't always work out at first glance. There are solutions:
More equity: Reduces the mortgage and improves affordability.
A more affordable property: Sometimes less is more.
Including a second income: For couples, consider both incomes.
Improving creditworthiness: Pay off debts, end leases.
Increasing amortisation: Voluntary amortisation improves affordability at refinancing.
Together we'll find the way to your own home.
Avoid common mistakes
These are the mistakes we see most often in practice
Only calculating with the current rate
The burden becomes too high if rates rise.
Underestimating ancillary costs
1% of the property value per year for upkeep, insurance, taxes.
No buffer planned
Unexpected expenses can throw your finances off balance.
Not thinking about retirement
Affordability must also work with retirement income.
Checklist: your next steps
What you can do right now
Frequently asked questions about Affordability Analysis
Answers to the most important questions
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