Saron and fixed-rate mortgages are two different types of mortgage loan in Switzerland. The main difference lies in the way the interest rate for the loan is calculated:

• Saron mortgages:

  • The interest rate of a Saron mortgage is based on the Saron (Swiss Average Rate Overnight). This is a reference interest rate based on the average interest rates at which banks grant each other short-term loans. The interest rate of a Saron mortgage can change regularly, depending on the development of the Saron rate.

• Fixed-rate mortgages:

  • With fixed-rate mortgages, the interest rate remains constant for an agreed period (e.g. 1, 3, 5 or 10 years). This provides security for planning monthly payments, as the interest rate remains unchanged during the fixed term.

• Saron mortgages:

  • Advantages: Potentially lower interest rates as they are based on current market conditions.
  • Disadvantages: Changes in the interest rate can lead to increased monthly payments if the Saron rate increases.

• Fixed-rate mortgages:

  • Advantages: Stable and predictable monthly payments during the fixed term.
  • Disadvantages: Potentially higher initial interest rates compared to variable rate Saron mortgages.

The choice between Saron and fixed-rate mortgages depends on your risk tolerance and your need for interest rate security:

• If you want to benefit from potentially lower interest rates and are prepared to take the risk of interest rate fluctuations, a Saron mortgage could be suitable.
• If you prefer stable and predictable monthly payments and are willing to accept possibly slightly higher interest rates, a fixed-rate mortgage would be a better choice.

Yes, in Switzerland mortgage holders usually have the option of changing their mortgage during the term. This can be done by switching to another provider in order to benefit from more favorable interest rates, or by changing the type of mortgage (e.g. from a variable Saron mortgage to a fixed-rate mortgage).

The amount of a mortgage is determined by various factors, including

• Income and creditworthiness: The borrower’s financial situation and creditworthiness play a decisive role.
• Property value: The value of the property to be financed influences the creditworthiness and the amount of the loan.
• Equity: The higher the equity, the lower the interest rate can be and the less credit is required.
• Interest rate and term: These factors determine the monthly charge and the total cost of the mortgage.