How is mortgage affordability calculated?

The bank uses an imputed interest rate of approx. 5%, plus 1% ancillary costs and 1% amortisation. These costs may amount to no more than one third of gross income.

What income do I need for a mortgage of CHF 1 million?

For a mortgage of CHF 1 million, the imputed costs are around CHF 70'000 per year. You therefore need a gross income of at least CHF 210'000.

Is the income of both partners counted for affordability?

Yes, for married couples the entire household income is taken into account. For unmarried cohabiting couples, most banks also accept both incomes.

What can I do if affordability is just short?

Possible levers: contribute more equity, pledge Pillar 3a assets, take an advance on inheritance, or buy a less expensive property. Some banks also assess based on actual income rather than imputed values.

Mortgage Affordability: The Most Important Hurdle When Buying Property

Banks use an imputed interest rate to check whether you can sustain the mortgage long-term. This is how the calculation works.

Mortgage Affordability: The Most Important Hurdle When Buying Property

1. What is affordability?

2. The rule of thumb: ⅓ of income

3. Imputed interest rate explained

4. The full affordability calculation

5. Worked example

6. What to do if affordability is tight?

7. Affordability with SARON vs fixed-rate mortgage

8. Avoiding common mistakes

9. How banks assess affordability + creditworthiness