How much financial reserve should I have after purchasing my own home?

Liquidity planning: The anatomy of security

To answer the question of how much to set aside, we need to categorize expenses. It's not enough to simply have a lump sum in the account; you need to understand what the financial reserves for homeownership are intended for. We divide the buffer into three main categories.

1. The immediate costs of subsequent purchases: The "moving-in buffer"

Many buyers are surprised how quickly their money disappears in the first few weeks after receiving the keys. The financial reserves set aside for homeownership are often depleted even before the first dinner in their new home.

• Fees and taxes: Depending on the canton, property transfer taxes and notary fees may apply, which are not always fully covered by the mortgage.
• "Light" renovations: You only wanted to paint, but suddenly you realize that the bedroom floor needs replacing.
• Furnishings: Larger rooms often require more furniture. Lamps, curtains, and garden equipment quickly add up to 10,000 to 20,000 Swiss francs.

Without specific financial reserves for this phase of homeownership, you'll start your life as a homeowner with an overdraft. Realistically, plan for approximately 2 to 3 percent of the purchase price separately for this purpose.

2. The ironclad foundation: Securing one's livelihood

Regardless of the property, you need a buffer for your life.

• Scenario: Job loss, illness, or reduced working hours. The bank demands its mortgage payments on time, regardless of your financial situation.
• The rule of thumb: Experts advise that financial reserves for home purchase in this area should cover 3 to 6 months' expenses (not monthly salaries, but fixed living costs including housing costs).

This portion of your financial reserves for homeownership is your insurance against a personal financial catastrophe . It guarantees that you can service the mortgage even in times of crisis and that the bank won't get nervous.

3. The maintenance buffer: The 1 percent rule

The house itself is a "living" organism that ages. The financial reserves for purchasing a home must offset the depreciation of the property.

As the owner, you are responsible for everything: from a dripping tap to a new roof.

• The rule of thumb: Set aside approximately 0.7 to 1.0 percent of the building insurance value (replacement value of the house) annually for maintenance.
• The reality: Sufficient starting capital should be available immediately after purchase. If the heating system fails in the first winter (costing approximately 20,000 to 30,000 Swiss francs for a heat pump), this should not trigger a financial crisis.

Specific financial reserves for home maintenance should therefore amount to at least CHF 20,000 , readily available in a separate account. For older properties (built before 1990) without extensive renovations, this amount should be doubled to CHF 40,000 to CHF 50,000.

4. The interest rate buffer: protection against volatility

Did you choose a SARON mortgage? Then financial reserves are even more important for homeownership.

• The risk: If interest rates rise sharply, your monthly payments will increase immediately.
• The strategy: Set aside the difference between your current interest rate (e.g., 1.5%) and the bank's imputed interest rate (5%) each month. These financial reserves for homeownership serve as a buffer against interest rate increases or as additional amortization.

Aggregation: A concrete example

Let's look at an example. You buy a house for 1 million Swiss francs. Your monthly expenses for mortgage, utilities, and living costs amount to 6,000 Swiss francs.

How high should your financial reserves be for home ownership? What would it be after deducting equity capital?

• Cost of living (4 months): 4 x 6'000 CHF = 24'000 CHF .
• Maintenance start-up capital: Lump sum of CHF 20,000 (for emergency heating/roofing).
• Furniture/Moving: Flat rate of CHF 10,000 .

Total: You should still have around 54,000 Swiss francs in liquid assets after the notary appointment.

Emptying your bank account to buy a house is a massive risk. It's often wiser to take out a slightly higher mortgage (e.g., 75% instead of 65%) to keep more liquid financial reserves in your account for homeownership. Liquidity is more valuable in an emergency than lower debt.

Where should the reserves be located?

Financial reserves for home purchase should not be invested in volatile stocks or fixed-income investments.

• Availability: The money must be available at short notice (money market account or savings account).
• Separation: Keep your home purchase savings strictly separate from your salary account. A "renewal fund account" (also useful for single-family homes) fosters discipline. You don't see the money, so you won't spend it on consumption.

Conclusion

The question "How much financial reserve should I have after purchasing my own home?" can be answered in one word: Enough. Enough to survive for six months without a job, and enough to order a new heating system tomorrow. Specifically, for most Swiss homeowners, this means between 30,000 and 60,000 Swiss francs in readily available cash.

Never underestimate the psychological component. A beautiful house brings no joy if the mailbox becomes a source of anxiety because every bill triggers panic. Include your financial reserves for homeownership as a fixed component of your financing plan – just like your down payment. It's better to choose a slightly smaller dream house and be able to sleep soundly at night.

If you want to calculate exactly how your individual liquidity situation after the purchase will look under different interest rate scenarios, or what the optimal buffer is for your specific property, Loft offers detailed analysis tools for your budget planning.

Glossary

• Financial reserves for home purchase: The total amount of liquid funds that must be available after purchasing a house to cover living expenses, interest, and unforeseen repairs.
• Renewal fund: A reserve fund (mandatory for condominiums, voluntary for single-family homes) to finance future renovations. It is part of the long-term financial reserves for homeownership .
• Imputed interest: A theoretical interest rate (usually 5%) that should be used to calculate the interest buffer in order to robustly plan the financial reserves for home purchase .
• Asset rich , cash poor : A situation where assets are tied up in real estate, but there are no liquid financial reserves available for everyday living expenses.
• Liquidity: The availability of funds. For financial reserves for home purchase, it is crucial that these funds are quickly (liquidly) available and not tied up in fixed investments.