Swiss mortgage refused: why, and what to do next

A refusal from one Swiss bank is not the end of your project. All banks apply the same core rules, but each has its own margin of appreciation. Understanding exactly why you were turned down is the first step: very often, the same file can be accepted elsewhere, or after a targeted change.

Key points

Most refusals come from the affordability test at a theoretical 5%.
Next: equity below 20%, or too much of it from the pension fund.
Then: income seen as unstable, permit or residence, valuation below the price.
Ask for the reason, fix what can be fixed, and compare lenders before reapplying.

The usual reasons for a refusal

Affordability. Banks add up a theoretical interest of around 5% of the mortgage, the required amortisation and about 1% of the property value for maintenance. This must stay below one third of your gross income. Many households who could easily pay today's actual rate fail this test on paper. You can test your own figures with our Swiss mortgage calculator.
Equity. At least 20% of the price is required, and at least half of it (10% of the price) must not come from your pension fund. Buying costs (in Vaud about 4 to 5% of the price) come on top.
Income. A recent job still on probation, a fixed-term contract, a self-employed activity with a short track record or variable bonuses can be counted only partly, or not at all.
Permit and residence. Some lenders are stricter with recent arrivals or with B permits. Check also that the purchase itself is allowed for your permit: see buying with a B permit.
The property. If the bank values the property below the price you agreed, it lends on its own valuation, and the gap must be covered by more equity.
Existing debts. Car leasing, consumer loans or alimony reduce the income the bank takes into account.

What you can do

Get the exact reason. Ask the bank which criterion failed. The solution depends on it.
Strengthen the equity. Savings, a family gift or an advance on inheritance, or a pledge of pension savings instead of a withdrawal.
Lower the affordability ratio. A smaller loan, a second income (a co-borrower), or a property at a lower price.
Change lender. Banks, insurers and pension funds do not all count bonuses, self-employed income, permits or pension money the same way.
Present a complete file. One strong application to the right lenders works better than many quick ones.

As an independent broker, I compare more than 30 banks and insurers. The analysis is free and without commitment, and we can do it in English.

Frequently asked questions

Why do Swiss banks refuse mortgages?

Most refusals come from the affordability rule: the bank calculates your housing cost with a theoretical rate of around 5%, and it must stay below one third of your gross income. The other common reasons are equity below 20% (or too much of it from the pension fund), an income the bank considers unstable, and a property valued below the purchase price.

If one bank says no, will the others too?

Not necessarily. All banks apply the same core rules, but each has its own margin of appreciation: how it counts bonuses or self-employed income, how it values the property, how it treats permits and pension money. Another bank, an insurer or a pension fund may look at the same file differently.

Should I apply to many banks at once?

It is better to understand the reason for the refusal first, then send one complete, well-presented file to the lenders most likely to accept it. A broker can do this comparison for you.

What can I change to get a yes?

Depending on the reason: add equity (savings, a family gift, a pledge of pension savings), lower the loan, include a second income, choose a different lender, or negotiate the price if the valuation came in low.

Turned down by your bank? Tell me about your file, in English.

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Sources: FINMA, minimum requirements for mortgages (2012) ; FINMA, mortgage self-regulation (2014).

This article is for information only and is not personalised legal, tax or financial advice. Rules can change: check your situation with a specialist before you commit.