Mortgages In Switzerland: How The System Works

(MENAFN- Swissinfo) Home loans are cheap in Switzerland. There are good sides and bad sides to this. Here is what you need to know about mortgages in Switzerland, a country renowned for its banks. This content was published on June 21, 2025 - 10:00 8 minutes

I write about demographic developments, societal trends and debates in Switzerland. I joined SWI swissinfo after 15 years at a local newspaper in Zurich.

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Mortgages, it is often said, are a burden that a person has to carry for many years – perhaps even for life.

In reality, though, property loans in most countries are designed so that the debt is paid off at some point. Thus, in Germany, France and the United States, so-called repayment mortgages are common. Here the borrower repays the capital and the interest in fixed instalments over a fixed period.

The counter-model is a loan where only the interest is paid on the amount borrowed. Once the mortgage term ends, the full capital is due – and the borrower usually takes out a new mortgage. This interest-only model was particularly popular in the UK, until it was superseded by the repayment model.

Switzerland, meanwhile, follows its own path. The principle of deferred debt is still common here. And because the home loan business is attractive for banks, there are also strong incentives for people in Switzerland not to pay off bank debts in full. Thus, mortgage holders can fully deduct mortgage interest payments from their taxes.

Here is an explanation of how the system works, and what the consequences are for homebuyers and for society.

Do mortgages have to be paid off in Switzerland?

The answer is yes and no. To buy a home in Switzerland, people need to be able to pay 20% of the purchase price upfront through their own funds. The rest is financed by the bank through a mortgage.

In Switzerland, mortgages are divided into two parts. The first part (up to 65% of the property value) does not necessarily have to be amortised, i.e., paid back. The second part (15%) must generally be amortised within 15 years, or by the time the borrower reaches retirement age.

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