Saving up equity: How you too can own your own home |

From dream to dream home: How to save the equity you need

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14.06.2021 | 3 minutes

Many people dream of escaping the rental market and living in their very own property instead. But anyone who is serious about turning this dream into a reality will soon realize they need to have sufficient resources behind them. This article tells you some of the best ways to save up the equity you will need.

How to make saving easier

Follow these tips and the dream of owning your own home could come true faster.

Be specific about your lifelong dream

Some people just want to take each day as it comes, while others have a burning desire to travel the world; but for many, the goal is to become financially independent as soon as possible. And for some people, owning their own property is an essential aspect of making this dream come true. To pursue this goal with a laser-like focus, it should be planned out very specifically: “My biggest dream is to own my own home in eight years, at the latest.” For some, it can be helpful to tell friends and family about these plans, since this establishes a commitment and motivates the individual to achieve their goal. A vision board can help some people visualize and focus on their dream.

Improve your financial situation

So you’ve finished your training or degree course, signed your first employment contract, and are getting a fixed salary paid into your account every month. Now is the right time to make a rough assessment of how your financial situation might develop over the coming years. How high are your incoming and outgoing payments? would it be possible to save on rent costs by living with roommates or finding an affordable place to stay? What about your job – Is there an opportunity to work toward a promotion?

Define your ideal savings amount and timeframe

Once you know how much financial leeway you have, it is relatively easy to come up with a monthly savings amount. How many years before you want to have fulfilled your dream of buying a property? Does this give you enough time to save the equity you will need for a mortgage? If not, then you know you will need to gradually increase your monthly savings amount, extend your savings period, or look into other options such as arranging an advancement on an inheritance.

Stick to your goal

Your friends may start a family, treat themselves to luxury goods, or take expensive trips – it’s their way of enjoying life. Saving up for a property is another way. Even if your dream will not become a reality for a while, just remember: Continue to be patient and do not let yourself be swayed, even if you encounter setbacks.

Or perhaps you understand “sticking to your goal” a little differently – for example, that you are pursuing your ultimate goal of owning your own four walls, but moving toward it in stages. You see yourself at first buying a smaller apartment, then building up more equity for a potentially larger property by saving on rent.

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How much equity do you actually need?

The amount you will need to save as equity will depend primarily on the market value of the property in question. At least 20% of the value must be paid out of your own pocket for owner-occupied residential properties, in which case the other 80% can be financed by the bank or another mortgage provider. Let’s say the property you want has a market value of one million francs, then your own contribution would be 200,000 francs.

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Ways to save

Savings account

A savings account has to be the most important. To really commit to your savings project, it may be worth setting up a standing order that transfers part of your wage to a separate account each month. Out of sight, out of mind: This approach will stop you giving in to the temptation to spend your entire monthly salary down to the last franc. But if you want to take the opportunity to invest as well, an investment fund account (Fondskonto) may be the right choice for you.

Investment fund account (Fondskonto)

An investment fund account (Fondskonto) combines the benefits of saving in a savings account with the earnings potential of a financial investment – even if you are depositing only small amounts. It works like this: The customer decides on a monthly savings amount, which is then transferred into an investment fund account (Fondskonto). They then buy shares in funds using this money – more shares when prices are low, fewer when prices are high. This means the customer is always guaranteed an average purchase price and any fluctuations in value do not have such a serious impact. Depending on how the financial market develops, the investor can benefit from relatively high returns. And the great thing about it is this: If money is needed, it can be withdrawn at any time – just like a normal savings account.

Pillar 3a (Säule 3a)

The real purpose of this private pension plan – also called tied pension provision (gebundene Vorsorge) – is to put you in a better financial position during retirement. So how is this model supposed to help you fulfill your real-estate dream? Well, there are some exceptions where the savings can be paid out before retirement age, such as if you want to withdraw them early to use in buying your own home. Another great advantage of saving via pillar 3a (Säule 3a) is that any sum paid into the account not only grows your savings, it also helps you reduce your tax liability. This is because any payments made to a 3a account are fully deductible from your taxable income. So it’s almost like putting money away twice: on the one hand by depositing it into your pension account, and on the other hand by saving on your tax bill. In addition, it is possible to optimize retirement planning with sustainable securities (Vitainvest).

Reduce debt and loans

Get into the habit of saving a small amount every month. That’s definitely a good thing to do. But your first objective should be to repay any existing debts as quickly as possible. This is especially true for 18 to 24-year-olds who, according to the Federal Statistical Office, are the group who are most in debt.


Although the equity you will need to secure a mortgage may initially seem quite high, there are ways of saving this sum relatively quickly. It just requires you to practice discipline while making the most of appropriate investment opportunities such as an investment fund account (Fondskonto) and the pillar 3a (Säule 3a).

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