In Geneva, where the entry price often exceeds one million, almost no purchase happens without a mortgage. Understanding its mechanics — the ranks, the rate forms, amortisation — is not a theoretical exercise: each of these choices amounts to tens of thousands of francs over the course of an ownership period.
What a mortgage actually is
A loan secured by the property itself. The bank advances the funds; in return, it receives a lien registered with the land registry, evidenced by a mortgage note. If the borrower stops paying, the property answers for the debt. As long as they keep paying, they remain full owners — the bank only holds a security, not a title.
First and second rank
The loan is split into two tranches, and this distinction governs the entire repayment plan:
- The first rank covers up to two thirds of the property’s value. It does not have to be repaid on an imposed schedule — many owners keep it indefinitely;
- the second rank is the tranche beyond two thirds, up to 80%. This is the one targeted by mandatory amortisation, and the timeframe is not left to the bank: the guidelines of the Swiss Bankers Association require the debt to be brought down to two thirds within fifteen years at most, or by retirement age if that comes sooner. A purchase at fifty-five is therefore repaid over ten years, not fifteen — the monthly instalment is not the same.
Fixed rate, SARON or variable
| Form | Principle | For whom |
|---|---|---|
| Fixed rate | Constant over the chosen term: protected from rises, without benefiting from falls | The security of a known budget; penalty if you exit early |
| SARON | Indexed to the Swiss reference rate, periodically revised, fixed bank margin | Historically cheaper on average, more exposed to movements |
| Variable | Follows the market, with no fixed term: maximum flexibility, at the highest rate | Transitional situations — planned sale, ongoing inheritance |
Many Geneva owners combine both: a portion in a long fixed rate, a portion in SARON — the different maturities smooth out renewal risk.
Amortisation: direct or indirect
Amortising means repaying capital — a forced saving that reduces the debt. With direct amortisation, you repay the bank: the debt falls, and so does the interest. With indirect amortisation, you pay into a pledged 3a pillar: the debt stays stable, but the savings build up with a tax advantage. The right choice depends on your marginal tax rate and your time horizon — our dedicated article compares the two mechanisms in detail.
Note that from 2029, the deduction of mortgage interest disappears for a main residence — the reform of the imputed rental value will reshape this calculation.
What the bank requires
A minimum of twenty per cent equity, of which half must come from outside the second pillar, and theoretical costs — rate at 5%, amortisation, maintenance — that fit within a third of gross income. The figures, price by price, are set out in our article What income do you need to buy in Geneva, and our mortgage simulator applies these rules to your situation in two minutes.
Your equity: where it comes from changes everything
“Twenty per cent equity” conceals a stricter rule. Bank self-regulation requires that at least 10% of the lending value be “hard” equity — that is, NOT coming from the second pillar. Savings, third pillar, gift, advancement on inheritance, securities: all count, except the pension fund. On a property worth CHF 1,500,000, that means CHF 150,000 that must exist somewhere other than in your occupational pension, before even discussing the rest.
A word on this “lending value”, as it regularly trips up Geneva buyers: it is not the price you pay, but the value the bank assigns to the property after its own valuation. The two often coincide — but when a property sells above the bank’s valuation, which happens in the sought-after areas of the Left Bank, the bank finances 80% of ITS value, not 80% of your price. The difference comes out of your own pocket, on top of the planned equity. This is why a valuation based on recorded transactions is worth more, before you make an offer, than a market hunch.
For the remainder, occupational pension provision offers two paths — and choosing between them is one of the most costly decisions in the whole process.
| Early withdrawal | Pledge | |
|---|---|---|
| What happens | The money leaves the fund and becomes your equity | The money stays in the fund, but secures the loan |
| Immediate tax | Yes — the withdrawal is taxed separately, at a reduced rate | None |
| Debt | Lower, so lower interest | Higher: you borrow more |
| Retirement | Reduced benefits, and often death and disability cover along with them | Intact, the capital keeps working |
Federal rules govern the withdrawal: CHF 20,000 at minimum, one request every five years at most, and after age fifty a ceiling — the vested benefits you were entitled to at that age, or half of the current amount, whichever is higher. Withdrawing before age fifty therefore means drawing down capital that would have earned returns for twenty years; a pledge lets it keep working, at the cost of higher debt and theoretical costs. There is no general right answer: it depends on your marginal tax rate, your age and your time horizon. The mortgage simulator quantifies both scenarios.
Renewal: the maturity date that needs preparing
A fixed-rate mortgage reaches maturity — and the renewal rate can change everything. Negotiation starts twelve to eighteen months beforehand, not in the final month: our renewal guide details the timeline and the levers available.
In practice, for your Geneva project
The mortgage is never the starting point: it finances a property. Start with the search area — our properties for sale on the Left Bank, the new-build projects, and the off-market listings for what is not publicly advertised. Test your capacity with the simulator before viewings: negotiating with financing already secured changes the balance of power. And if your purchase depends on selling your current property, a valuation based on actual transactions sets the starting point. Every technical term on this page is defined in the glossary.