Mortgages in Switzerland: Bank, Insurance Company, or Pension Fund?

For many people, banks are the first stop when looking for a mortgage. But depending on which kind of mortgage you need, it is worth looking at offers from other lenders as well.

Which companies offer mortgages?

In Switzerland, mortgages may be offered by:

• Banks
• Insurance companies
• Occupational pension funds

In recent years, mortgage offers from peer-to-peer loan platforms have also begun to emerge, but are not yet widely offered.

How do the interest rates compare?

There is no blanket answer to that question, Each bank, insurance company, and occupational pension fund has its own interest rates. You can compare the current reference interest rates from many Swiss banks and insurance companies using the interactive Swiss mortgage comparison on moneyland.ch.

The graph below provides an overview of the average interest rates for fixed-rate mortgages across numerous banks, insurance companies, and pension funds that offer mortgages.

The comparison above indicates that insurance companies and pension funds tend to have somewhat lower interest rates than banks. However, it is important to understand that the figures shown are averages based on a single sampling. To find the current lowest advertised interest rates, you should compare mortgage offers based on your individual needs.

What are the advantages of getting a mortgage from a bank?

In principle, there is no difference between getting a mortgage from a bank, or from an insurance company or pension fund. However, there are some situations in which getting a mortgage from a bank can be beneficial.

• Holiday homes and investment properties

Many insurance providers and pension funds only accept mortgages for primary residences. Banks, on the other hand, typically also accept secondary residences and properties you rent out.

• SARON mortgages

If you want to use a SARON mortgage, you will largely be limited to banks and insurance companies, as many pension funds do not offer this kind of mortgage.

• Flexibility

Banks are often more flexible with regards to negotiating interest rates. If you use a mortgage from your main bank, the bank is more likely to consider your overall financial situation when deciding if you are eligible for a mortgage. That can work in your favor.

• Indirect amortization

Banks and insurance companies may require you to use their pillar 3a savings or investment solutions for indirect amortization of a mortgage. In this case, banks are usually the better choice because the pillar 3a life insurance products used by insurance companies are not usually an optimal saving or investment solution.

What are the advantages of getting a mortgage from an insurance company or pension fund?

• Longer fixed-rate mortgage terms

Many banks only offer fixed-rate mortgages with terms of up to 15 years or less. Fixed-rate mortgages from insurance companies and pension funds are often available with terms of 20 or even 25 years.

• Competitive interest rates

Many insurance companies and pension funds have relatively low mortgage interest rates for fixed-rate mortgages.

Should I get a mortgage from a bank, insurance company, or pension fund?

Mortgages are so costly that even small differences in the interest rate can add up to thousands or even tens of thousands of francs over the mortgage term. Because of that, getting the mortgage with the lowest possible annual interest rate is the most important thing.

The interactive Swiss mortgage comparison makes it easy to compare mortgage offers from Swiss banks and insurance companies based on advertised interest rates.

Services like locking in mortgage rates in advance, and discounts for energy-efficient housing can be found across banks, insurance companies, and pension funds.

More on this topic:
Compare mortgage offers from Swiss banks and insurance companies now
Mortgages from pension funds: A basic guide