Buy a Home
You should use your own funds

Anyone in Switzerland who wants to buy a home needs sufficient Own funds. These own funds form the basis of any mortgage financing and often determine whether the dream of homeownership becomes a reality. Generally, you must finance at least 20% of the Purchase price yourself. For a home costing one million francs, for example, this amounts to 200,000 francs in own funds.

Using Your Own Funds Wisely
Here Are Your Options

Many people believe that this money must be held entirely in a savings account. However, that is not true. There are numerous ways to use your own funds. Often, the right combination is what determines whether financing is even possible.
Here’s what you’ll learn:
• What types of own funds are generally eligible
• The pros and cons of each option
• Which own funds we would use first
• Which assets do not count as Own funds
• Why choosing the right Mortgage lender can influence the Own funds requirement

1. Savings and account balances

Savings and checking account balances are the traditional forms of equity and are, in most cases, the best options for financing a home. They are available at any time, are accepted by virtually all mortgage lenders, and can be used without any additional administrative effort. However, be sure to retain sufficient liquidity reserves after purchasing the property and avoid investing your entire net worth in the property.

2. Securities (stocks, ETFs, mutual funds, etc.)

Securities can also be used as own funds and represent an important component of financing for many buyers. However, before selling securities, you should consider the tax implications as well as the loss of potential future capital gains. Whether or not a sale makes sense depends on your personal investment strategy and your financial situation.

3. Advance on inheritance

An advance on an inheritance is one of the most common sources of financing for younger homebuyers today. It often significantly improves financing options and is frequently tax-advantageous. However, it is important that an advance on an inheritance be clearly defined and set forth in writing—particularly when there are multiple heirs—for example, in an inheritance agreement or a will.
 

4. Pillar 3a

The Pillar 3a can be withdrawn early for owner-occupied residential property and enables many families to purchase a home in the first place (WEF withdrawal). However, the impact on retirement savings as well as the one-time withdrawal taxes should be taken into account. Those who hold multiple 3a accounts may be able to optimize their tax situation when making a withdrawal.
 

5. Pension fund (2nd Pillar)

Pension fund balances can also be used to purchase a home. In this case, you have the option of either withdrawing the pension capital or simply pledging it as collateral. While an early withdrawal increases the available own funds, it simultaneously reduces your retirement savings and may result in lower benefits in the event of disability or death. Therefore, we recommend carefully reviewing your retirement situation after an early withdrawal and creating a long-term financial plan. In many cases, pledging your retirement savings is the better solution, as it preserves your retirement savings.

6. Gifts

Gifts from parents or other family members can also be used as own funds. Depending on the canton, gift taxes may apply. It is also advisable to document gifts within the family transparently to avoid any confusion later on.

7. Existing property

If you already own a home or a Holiday condominium, your existing Mortgage may be increased under certain circumstances. This provides additional Own funds for the purchase of another property. Precisely because of rising real estate prices, there is often more flexibility here than many homeowners realize.

8. Lot

Depending on the situation, existing lots may also count toward Own funds. The key factor here is how the respective mortgage lender values the plot and incorporates it into the financing.

9. Life insurance

With capital-accumulating life insurance policies, the cash value can often be used as Own funds. However, early termination often results in significant financial losses. Therefore, you should carefully consider whether pledging the life insurance policy might be the better solution.

10. In-house Services

Some mortgage lenders may count personal contributions toward own funds. This applies primarily to people in the trades who are able to perform significant work on their own home themselves. Since requirements vary widely, it’s worth comparing the options offered by different mortgage lenders.

11. Sale of another property

Anyone selling an existing property and buying a new one at the same time can, of course, use the proceeds from the sale as own funds. However, the timing of the sale, any interim financing, and tax considerations should be planned well in advance.

12. Sale of Other Assets

Gold, precious metals, works of art, equity interests, or other assets can also serve as own funds after they are sold. Whether this makes sense depends in particular on expected future returns and the tax implications.

13. Employee Stock Ownership Plans

Employer-sponsored stock or equity participation programs may also serve as Own funds, provided they can be sold or used as part of a loan-to-value ratio. Whether and to what extent this is possible depends on the specific terms of the agreement.

14. Cryptocurrencies

In principle, cryptocurrencies can also be used to help finance a home purchase. In practice, however, most mortgage lenders require that they be sold before the property is purchased. Due to the sometimes significant price fluctuations, it is advisable to plan the sale well in advance rather than waiting until shortly before the purchase decision is made.

15. Family Loans

Some mortgage lenders accept loans from parents or other family members as part of the financing. However, the requirements vary considerably. Such loans should therefore always be set forth in writing and clearly define whether and how repayment is to be made.
It’s not just the amount that matters—but also the order of priority.

Valuation
An Often Underestimated Factor

There’s one point that many buyers completely underestimate. The purchase price isn’t always the deciding factor. The mortgage lender’s assessment is often what matters most.

For example, if a bank appraises the property at 950,000 Swiss francs, even though you’re paying 1,000,000 Swiss francs, you’ll have to cover the difference yourself using your own funds. This alone can suddenly require an additional 50,000 to 100,000 Swiss francs in Own funds.

Mortgage lenders also differ significantly in how they factor renovations into the purchase price. While some mortgage lenders take the planned investments into account to a large extent, others factor in only a small portion.

The differences between mortgage lenders—even when considering other factors—can be enormous in some cases.

Our Conclusion
The order matters—and the comparison

Not every mortgage lender accepts the same type of own funds. There are also significant differences in property appraisals, affordability calculations, and financing options. That’s why the same person might be turned down by one mortgage lender but easily approved for financing by another.

One thing is clear: Sufficient own funds are the foundation of any Mortgage. However, what matters is not only how much equity you have, but also what types of own funds are used, the order in which they are used, and which mortgage lender best suits your situation.