Pillar3a and buying property: how to become a homeowner in Switzerland
18 May 2026
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Guillaume Chassot
Buying a dream villa, a city-centre apartment or renovating an old house: ideas quickly spring to mind when you start planning to buy property. Whilst for some, getting on the property ladder and making their first purchase is easy, for others it’s a real struggle.
Between equity, bank loans, interest rates, repayment and mortgages, it’s easy to get lost. Here we outline the key steps to help you finally get the keys to your new life as a homeowner.
Four main financing rules
First and foremost, there are four main rules to be aware of when considering home ownership in Switzerland and how to finance it.
20% of your own funds
To become a property owner in Switzerland, you must provide at least 20% of your own funds. This is the basic financial contribution required of prospective buyers, half of which must be provided in cash (i.e. excluding LPP/BVG 2nd pillar contributions).
Maximum debt-to-income ratio of 33%
Furthermore, the theoretical housing costs (interest calculated at a conservative rate, mortgage repayments and fees) must not exceed 33% of the buyers’ gross income. In practice, this ratio is often the main limiting factor, particularly in regions of Switzerland where prices are high.
Amortisation in accordance with FINMA rules
The mortgage debt must be repaid up to two-thirds of the property’s value, within a maximum of 15 years, and before the reference retirement age. This rule is independent of the issue of initial equity. Once this threshold is reached, the remaining mortgage can generally be retained without mandatory repayment.
Allow for associated costs
In addition to the property price and interest, you should allow for approximately 5% in costs calculated on the property’s value (notary, land registry, transfer duties depending on the canton), which cannot be financed by the mortgage. You will therefore need to set aside sufficient cash to cover these costs.
Step one: building up your own funds
Here are various possible sources for building up your own funds to buy a house in Switzerland:
Private savings
Early withdrawal from the 2nd pillar
Inheritance or gift (land, property or capital)
3rd pillar
Example: if you wish to purchase a property worth CHF 1 million, you will need CHF 200,000 in equity. As mentioned above, at least half of this equity (in this case CHF 100,000) must come from a source other than your LPP/BVG savings.
It is obviously easier for a couple to build up their equity. For security reasons (pension provision, death and disability risks), it is not always advisable to draw on your 2nd pillar for a property purchase.
Why the 3rd pillar is an effective tool
To build up equity for the purchase of a property, setting up a 3rd pillar is a suitable solution. This option often forms the basis of the required equity, excluding the 2nd pillar, and can also be used to pay off the mortgage debt.
In Switzerland, whilst the2nd pillar is compulsory for employees, the 3rd pillar is optional. You can set it up with a life insurer, a bank or a combination of both, whilst adhering to the maximum annual contribution limit (for tied pension savings 3a). With the 3a pillar, contributions are tax-deductible and therefore allow you to save on tax each year.
The advantage of the insurance solution lies in the cover it provides in the event of unforeseen circumstances, such as an inability to work due to illness or accident, or death. To help you secure your savings goal, the life insurance company will cover the premium in the event of incapacity to work, or pay out a lump sum to your family in the event of death.
Retroactive top-ups in Pillar 3a
Since 2026, it has been possible to make retroactive contributions to make up for shortfalls in Pillar 3a contributions.Each year, specifically 2025 and subsequent years, where the Pillar 3a limit has not been reached, can therefore be made up, and the payments deducted from your taxable income. This is a particularly effective way to build up your equity to become a homeowner.
Early withdrawal or pledging?
Whether you are financing a property via the 2nd or 3rd pillar, you have the option of withdrawing your pension savings or opting for a pledge.
Early withdrawal: your 2nd or 3rd pillar savings are used directly as equity.
Pledging: the savings remain invested and serve as collateral with the bank, but increase the interest burden and repayment instalments.
Step two: securing your mortgage
Once you have built up your equity, it’s time to apply for a mortgage. The financial institution, such as a bank, will assess:
your household income;
your current and future expenses;
the value of the property;
as well as the structure of your equity.
Once the financing is deemed affordable, the institution may agree to lend you money: in this case,
CHF 800,000 for the house valued at CHF 1 million.
As a financial institution is lending you money, mortgage interest will therefore be charged. Depending on your risk tolerance and planning horizon, you can opt for a fixed rate or the SARON mortgage rate, which is more flexible but less predictable.
In Switzerland, there are also two types of mortgage financing: a first-rank mortgage, which finances up to 65% of the property’s value, or a second-rank mortgage, which covers up to 80% of the value and must be repaid in accordance with the FINMA rules mentioned above.
Groupe Mutuel supports you with your property purchase
In partnership with Neho, one of Switzerland’s leading estate agents, Groupe Mutuel can now offerattractive financing solutions and support you through every step of the process – from start to finish – involved in finding, buying and financing a property.
As a Groupe Mutuel policyholder, you benefit from an exclusive discount of CHF 500 as part of your property purchase or mortgage financing project. You also benefit from Neho’s network of financial partners and the best rates on the market.
Step three: choose your repayment or amortisation method
Once you have sorted out your own funds and the loan guarantee, the next step is to choose your repayment method, i.e. how you will gradually pay off your mortgage. There are two main options available to you:
With direct repayment, you gradually repay your mortgage debt to the financial institution. Your debt decreases, but so do the tax-deductible interest payments.
More and more buyers are now opting for indirect amortisation for greater security. With this option, you repay your mortgage through a pension product (often a linked 3rd pillar scheme). Your debt remains unchanged until the final repayment.
The advantages of indirect amortisation
Tax savings: you can deduct the amount of your indirect amortisation from your taxable income, which will generate a significant tax saving, depending on the type of pension plan chosen.
Coverage of premiums in the event of incapacity to work: if you become disabled as a result of illness or an accident, the insurer will cover your amortisation-related premiums. In the case of direct amortisation, you must repay the debt yourself in order to continue living in your home.
Lump sum in the event of death and/or income protection benefit: in the event of death, a lump sum paid immediately to the surviving spouse will enable all or part of the mortgage to be repaid. It is also possible to protect yourself against the risk of disability through income protection cover in the event of incapacity to work due to illness or accident. This additional income allows you to continue meeting your mortgage repayments following an unforeseen event.
Abolition of the rental value: what you need to know
Following the public’s approval of the abolition of the rental value from 2029, here are the main tax implications to anticipate:
Homeowners will no longer have to declare notional income for their owner-occupied property, which will fundamentally change the taxation of housing in Switzerland.
In return, deductions for mortgage interest and maintenance costs will be largely abolished, with only transitional measures in place for first-time buyers.
This tax reform highlights the importance of receiving sound advice, as financing, amortisation and wealth planning now more than ever require a comprehensive and well-informed approach during the transitional phase until 2029.
Step four and final step: securing your project and covering your bases
Signing the deed of sale is now entirely up to you! As buying a property is very often a once-in-a-lifetime project, it is clearly worth considering your pension provision and the implications of becoming a homeowner.
Disability: safeguarding your financing. Disability cover may include a waiver of premiums to help you maintain your financial planning goals despite a loss of income. In the event of disability, the insurance will cover the financing of your property.
Death: protecting your loved ones: in the event of death, a lump sum will enable your family to meet the mortgage debt whilst keeping the home.
Getting your cover right: the sums insured must be consistent with your family situation, your debt and your long-term goals. This is a key step in any responsible property project.
In Switzerland, the 3rd pillar is therefore a key tool for buying a home. Set up early enough and used wisely, it helps to build up your equity, improves access to financing and supports a balanced wealth management strategy.
Whatever your family or financial situation, Groupe Mutuel supports you through all the key stages of your life, including your property projects. Please do not hesitate to contact our insurance and pension specialists!
Yes. The 3rd pillar can be used in the form of an early withdrawal or as collateral.
Does the 3rd pillar count as equity?
Yes, it forms part of the accepted equity excluding the 2nd pillar (LPP/BVG).
Why is the 3rd pillar a good option for becoming a homeowner?
As well as providing equity, it can be used to pay off mortgage debt and make tax savings. Taken out as an insurance policy, the 3rd pillar is particularly useful in the event of unforeseen circumstances such as loss of earning capacity or death.
Direct or indirect repayment for my mortgage?
Indirect repayment is safer and more tax-efficient. The mortgage debt remains unchanged and the interest is tax-deductible, as are the contributions made to the 3rd pillar. With direct repayment, the debt – and therefore the tax-deductible interest – gradually decreases.
About the author
Guillaume Chassot
Head of Business Development Pensions for French-Speaking Switzerland
