There are a number of options available to you as you search for the best mortgage. These include various mortgage and repayment models. We also need to keep an eye on future developments in mortgage rates. Here you can find out more about choosing a mortgage model and everything else you need to know.
The types of mortgages and their differences
There are various mortgage models on the Swiss market. Read more about differences, benefits and risks here.
A fixed-rate mortgage – as the name suggests – has a fixed term. The interest rate also remains the same during the term.
A fixed-rate mortgage is right for you
- if you prefer the interest payments to remain constant,
- if you want to calculate your budget accurately,
- if you would like to benefit from the current low interest rate environment,
- if you want to hedge against a rise in interest rates.
A fixed-rate mortgage also entails some risks:
- You will not benefit from any fall in interest rates during the term.
- The term may expire in a phase of high interest rates. You will then have a higher interest rate for the extension of the mortgage.
- High costs can be incurred in the event of premature termination.
There is no fixed interest rate for a variable mortgage. It adapts to the development of the capital market.
A variable mortgage is suitable for you
- if you wish to take advantage of the current capital market interest rates,
- if you would like to benefit from interest rate cuts,
- if you want to switch to a fixed-rate mortgage at any time,
- if you would like to amortise (repay) your mortgage directly.
The variable mortgage has the following disadvantage:
- Interest rate fluctuations can make it more difficult to calculate your budget.
The LIBOR mortgage has a fixed term but a variable interest rate. This is based on the LIBOR (London Interbank Offered Rate) or an equivalent reference rate. LIBOR is the official reference interest rate. It is reported daily by major commercial banks and published in London.
A LIBOR mortgage is ideal for you
- if you want to take advantage of the current low or short-term interest rates on the money market,
- if you are prepared to tolerate a rise in interest rates in the short term,
- if you would like to switch to another mortgage model at the end of the interest period.
A LIBOR mortgage is exposed to this risk:
- Your interest expenses can change every three to six months and therefore cannot be planned.
The SARON mortgage has no fixed term and no fixed interest rate. The interest rate is variable based on the SARON (Swiss Average Rate Overnight). The SARON has existed since 2009 and is calculated on the basis of completed transactions and binding quotes (purchase and sale prices) in the Swiss money market.
A SARON mortgage is right for you,
- if you want to benefit from interest rates remaining low or falling,
- if you would like to participate in the current interest rate trend during the selected term.
The SARON mortgage has these disadvantages:
- The actual interest amount is not known until the end of the relevant accounting period.
- Market interest rates can fluctuate.
If environmental protection is particularly important to you and you want to take environmental considerations into account when building, buying or renovating your home, you can take out a green mortgage, which enables you to benefit from attractive interest rates.
Mortgage repayment – everything you need to know
If you finance your home, the mortgage you have taken out is usually divided into a first and a second mortgage. Your second mortgage has to be amortised, i.e. repaid. The second mortgage usually has a term of 15 years. There are two types of amortisation:
Direct amortisation: You repay the mortgage debt in regular instalments. This reduces both the mortgage and the interest burden. The disadvantage: the amount that you can deduct from your tax return will also be smaller.
Indirect amortisation: You transfer the amortisation amount to a 3a retirement savings account or invest it in a 3a policy. The capital remains tied up until retirement age. You can then withdraw the money and repay the entire second mortgage in one go.
- The amount that you can deduct from your tax return for mortgage interest remains the same.
- The amount you pay into pillar 3a can also be deducted from your taxable income.
- You benefit from the returns and preferential interest rates for pillar 3a saving.
Current interest rates and interest rate development
Our Chief Economist Marc Brüntsch answers all your questions about interest rates in the video. He explains why interest rates are currently so low, how interest rates are actually generated and what factors have influenced the interest rate trend in the past. He also looks at the future prospects.
The best mortgage with Swiss Life
We work out the best mortgage on the basis of your personal situation. With the SwissFEX platform, we can find the best product for you from among the mortgage offers of various providers – even during your
consultation. We take into account your criteria such as purchase price, available equity and personal requirements – for customised offerings. Together with your advisor, you select the the financing offer that best suits you.
Your advantages with Swiss Life as an independent mortgage broker:
- Independent offers: We enable you to compare offers from various providers and create transparency. You decide in a self-determined manner from which provider we should obtain offers and where the financing should take place
- Saving time when researching: We can show you many offers in parallel – live in the office, at your home or digitally via video call
- Preferential conditions for mortgage offers: We can often exclusively negotiate better conditions than you would otherwise receive.
- Real-time calculation of interest conditions: Once the framework conditions have been adjusted, new conditions will become available immediately.
- Self-determined and protected: We ensure that you can continue to finance your home in the event of financial misfortune.
Mortgages offering best rates
Read here how to get the mortgage with the best interest rate for you.