What counts as Eigenmittel vs. Eigenkapital?

Eigenkapital in the narrower sense refers to the ownership share that belongs to you after the purchase: market value minus mortgage. This “bound” equity changes with price movements in the real-estate market, through amortizations (repayments) and through investments. It is therefore a stock variable, while Eigenmittel describe the inflows at the time of acquisition.

For financing practice a further distinction is made between “hard” equity and other own funds. Hard equity consists of available, non-borrowed funds that do not come from pension savings. In Switzerland, at least around 10 percent of the purchase price must come from such hard equity. This ensures that a core of the financing is independent of pension claims and that the affordability remains stable in the long term.

Pension assets from the occupational pension (pillar 2) or pillar 3a, by contrast, are considered Eigenmittel with special rules. They can be withdrawn or pledged under conditions, but do not count toward the 10 percent hard equity requirement. Their use affects taxes and later pension benefits and should therefore be considered within an overall view of financing and retirement provision.

When talking to lenders it pays to be precise: which funds count as hard equity? Which as other own funds (including pension assets)? And how does the mix affect loan-to-value, affordability and terms? Those who keep these term pairs distinct can better compare offers and assess the long-term consequences for wealth and retirement provision.