Financing vacation homes and apartments: Everything you need to know

How to turn your dream of owning your own vacation home into a reality

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07.05.2021 | 4 minutes

The dream of owning your own vacation home

Whether it’s skiing in the Alps, hiking in Ticino, or relaxing on Lake Geneva – imagine being able to enjoy all this from your very own vacation home, a wonderful place of retreat. Sounds tempting. But the second part of this fantasy in particular, the part where you own your own vacation home, comes at considerable financial expense and effort. It goes without saying that buying a vacation property in a good location is a pretty expensive endeavor anyway, but if you want to finance that purchase with a mortgage, certain requirements have to be met as well.

Stricter financing requirements

Since vacation homes or apartments are restricted to use as second homes, this makes them more difficult to sell and means banks are not willing to lend as much for them as for ordinary homes. Mortgages for vacation properties are granted based on different financing provisions, which take their limited salability into account. Read on and we will explain all.

View of several houses in front of a mountain landscape
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Increase your equity contribution

If you want to buy a vacation home with a mortgage, you need to contribute a lot more equity. By way of comparison, when financing an owner-occupied main residence, i.e., a house or a permanently occupied condominium, the mortgage may cover up to 80% of the total cost, which would leave an equity share of 20%. But a bank will normally only lend a maximum of 60% of the collateral value, as determined by the bank, when dealing with a vacation home or apartment.

No option to use pension assets

Unlike for your main home, you are not permitted by law to use your pillar 2 (Säule 2) and 3 pension assets to finance a vacation property. This means you will need to find the required equity elsewhere, for example, in your savings.

Consider your overall mortgage burden

Before granting a second mortgage, e.g., for a vacation home, the bank will take a customer’s existing mortgage burden into account. The imputed costs of a mortgage for a vacation property are deducted from the available disposable income. The costs of the main domicile (e.g., the imputed mortgage or rent costs) are set in proportion to the remaining eligible residual income and may amount to no more than one third of eligible income.

Stricter rules on the repayment obligation

Different principles also apply when it comes to amortization, i.e., how the mortgage is repaid, for vacation homes. If a vacation property has a mortgage of up to 50%, then 1% of the mortgage amount must be paid off each year.

A couple sits at a table with a calculator, laptop, and smartphone.
© Getty Images

Choose the right financing strategy

Just like when you are financing your main residence, it is important to consider which strategy best suits your financial and personal situation: Are you considering selling the property if market prices increase or do you want to keep it for the long term? And how willing are you to take risks when it comes to financing? You can request non-binding offers for financing your vacation home or apartment free of charge from key4, all it takes is just a few clicks.

A vacation home abroad

Switzerland is indeed a very beautiful country with many charming places where it is worth buying a vacation home. But would France or Italy suit your personal circumstances better? Do the same conditions apply to vacation homes abroad? In a word: no. Mortgage providers based in Switzerland do not mortgage any properties abroad – not even vacation homes.

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