Mortgage Financing for Commuters

Cross-border commuters: work in Switzerland or Liechtenstein, property in Vorarlberg

Cross-border commuters commute between two countries and receive their salary in the currency of the place of work. Many Austrian cross-border commuters live in Vorarlberg and commute to Switzerland or Liechtenstein. Quite a few cross-border commuters would like to fulfill their dream of owning their own home or condominium in Vorarlberg – despite the high property prices. There are a few things to consider when financing residential construction for cross-border commuters. Martin Häusler is a specialist in construction financing at the credit broker B-Quadrat in Dornbirn and knows what cross-border commuters need to pay attention to.

Mr. Häusler, what are the special features of cross-border commuters who work in Switzerland or Liechtenstein and buy or finance a property in Vorarlberg?

Martin Häusler: Since real estate prices in the Rhine Valley—and, in fact, throughout Vorarlberg by now—are very high, financing requires a high income and a down payment of at least 15 percent, though 20 percent is more common. Cross-border commuters generally meet these requirements, as wages in Switzerland and Liechtenstein are significantly higher than in Austria. Their strong creditworthiness thus makes cross-border commuters attractive to banks. In addition, they benefit from a special provision in the pension system. Specifically, the second pillar—the pension fund—offers an option to withdraw funds for owner-occupied housing. Although this withdrawal is subject to taxation, it provides additional capital that can be used toward financing the purchase.

When Austrian banks finance real estate for cross-border commuters – is it in euros?

Martin Häusler: It depends. Financing in euros generally offers more options, since many banks provide euro-denominated loans and the property itself is also valued in euros. As a result, the loan amount remains constant relative to the property and is not affected by currency fluctuations between the euro and the Swiss franc.

For cross-border commuters, however, the situation is often different. Anyone who receives their income in Swiss francs but repays a loan in euros faces a certain currency risk. If the exchange rate changes unfavorably, the actual financial burden can change significantly. In individual cases, this risk should therefore be examined very carefully.

Due to the changing interest rate environment in recent years—with euro interest rates rising significantly and Swiss franc interest rates remaining comparatively attractive—more and more cross-border commuters are choosing to take out their home loans, either in full or in part, in Swiss francs.

The advantage: When both income and loan payments are denominated in Swiss francs, the currency risk between salary and loan payments is significantly reduced. This makes it easier to plan for monthly payments, which better align with your actual income situation.

Whether it makes sense to finance a purchase in euros, Swiss francs, or a combination of both, however, always depends on your personal circumstances, your risk tolerance, the property, and your long-term plans. That is precisely why personalized advice is especially important.

So should cross-border commuters prefer to take out their real estate financing in Swiss francs?

Martin Häusler: Mortgages in Swiss francs can be very attractive for cross-border commuters, but they should be carefully evaluated. Compared to euro-denominated mortgages, there are often fewer banks and products to choose from. At the same time, the options have expanded significantly: We have recently begun offering fixed-rate solutions in Swiss francs in addition to variable-rate mortgages.

This makes financing in Swiss francs more attractive even for customers who want greater predictability and interest rate security. Which solution is best—the euro, the Swiss franc, a fixed interest rate, a variable interest rate, or a combination of these—always depends on the individual’s personal situation.

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So what is the best housing finance for cross-border commuters?

Martin Häusler: That’s difficult to answer in general terms, as it depends on many individual factors. For many, it’s a combination of euros and Swiss francs. This is possible without any problems and has the advantage that you get the best of both worlds. On the one hand, the Swiss franc share minimizes the currency risk, on the other hand, euro financing gives you a much larger product selection and greater flexibility, e.g. through long-term fixed interest rates, interest rate bandwidth loans and many additional individual options. However, which products and currency or which mix makes sense varies from case to case.

Do Swiss or Liechtenstein nationals who want to buy or build in Vorarlberg actually get a loan from an Austrian bank?

Martin Häusler: Of course. In fact, this happens quite often, because real estate in Vorarlberg is a more suitable investment than in Switzerland or Liechtenstein, where rental yields are relatively low. And since only an Austrian bank can make entries in the Austrian land registry, financing is typically arranged through Austria.