SARON Mortgage
Flexible interest rates with savings potential
The SARON mortgage is now one of the most important in Switzerland. Unlike the , with the SARON mortgage you benefit directly from current market interest rates—with the potential for lower costs. However, if rise, you will immediately pay higher mortgage interest rates as well.
A mortgage loan model describes the type of interest rate structure and term of a mortgage, such as Fixed-rate mortgage,SARON mortgage, or variable-rate mortgage. Transparent models make it easier to compare options and help you consciously manage interest rate risk and ensure planning certainty. Find more information here about mortgages with long terms: 10-year fixed-rate mortgage
A fixed-rate mortgage is a mortgage with a fixed interest rate over an agreed term. This means that mortgage interest rates remain unchanged throughout the entire term, providing planning security regarding financing costs. Fixed-rate mortgages are among the most popular types of mortgages in Switzerland. Learn more here: Fixed-rate mortgages in Switzerland
Definition
SARON Mortgage
A SARON mortgage is based on the (Swiss Average Rate Overnight).
This means:
- The interest rate continuously adjusts to the market
- The SNB key interest rate is the main determining factor
- There is no long-term fixed interest rate
- Interest costs on SARON mortgages typically fluctuate significantly
In short: Flexible, market-driven, and often cheaper—but less predictable and therefore riskier than a fixed-rate mortgage.
Calculation
Effective interest rate
The effective Mortgage interest consists of two components:
- dem durchschnittlichen SARON-Zinssatz über eine Periode
- einer fixen Marge des Kreditgebers (im Vertrag vereinbart)
Important to know
- The margin remains constant throughout the term of the contract
- The reference interest rate changes continuously
- The actual interest costs are only known in retrospect
In practice, interest is usually calculated and charged quarterly based on a backward-looking average . This clearly distinguishes the SARON mortgage from a fixed-rate mortgage, where the costs are determined in advance.
You can find more information about SARON here
SARON calculator from SIX | Information from SIX about SARON
The Compounded SARON is a reference interest rate for SARON mortgages in Switzerland. It is based on the average SARON interest rate calculated over a specific interest period and serves as the basis for calculating the current mortgage rates in Switzerland for SARON mortgages.
Our Top Rates
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Information on the best mortgage rates from HYPOTHEKE.ch
The interest rates on our Mortgage platform are updated hourly by our Mortgage lenders. The “starting at” rates / top rates displayed here are offered by at least one provider on HYPOTHEKE.ch. These represent the best possible Mortgage interest rates currently available. Individual rates ready for closing depend on various parameters such as Loan-to-value ratio, Affordability, property value, region, and other factors, and may differ from the rates displayed here.
Visualization
How the calculation works
You won’t know the actual interest rate on a SARON Mortgage until the end of the interest rate period. This is because the SARON is recalculated daily and changes constantly.
That is why interest rates are not determined in advance but calculated retroactively.
Note
The calculation of SARON interest rates may vary slightly depending on the provider. Differences primarily arise in the time frame considered for the interest period. The effective interest rates are always determined retrospectively, as the SARON fluctuates daily. Therefore, this chart may differ from your specific contract.
Pros and cons
What you need to know
Benefits of a SARON Mortgage
Disadvantages of the SARON Mortgage
Facts or gut feeling?
People who take out a SARON Mortgage often do so based on gut instinct—because reliable information and facts are rarely publicly available. With this video, we want to change that so that you can make your decision not just based on gut instinct, but on a solid foundation of data and facts.
YouTube channel: @HYPOTHEKE
Florian Schubiger
Founder of HYPOTHEKE.ch
An Overlooked Detail
Framework Agreement for SARON Mortgages
SARON mortgages are usually taken out with a lasting 2 to 5 years. The is fixed for the term; switching providers is virtually impossible, and in the event of early termination—just like with a Fixed-rate mortgage—a . This means that even a SARON Mortgage is not entirely flexible.
The margin for SARON mortgages is the fixed surcharge that banks or other Mortgage lenders add to the SARON reference rate. The effective mortgage interest rates consist of the Compounded SARON and this individual margin. The size of the margin depends, among other things, on creditworthiness, Loan-to-value ratio, and the lender, as well as the borrower’s negotiating power. The SARON margin is an important criterion when deciding between a SARON mortgage and a fixed-rate mortgage.
An repayment penalty applies if a fixed-term mortgage is paid off early. The costs can be high and usually depend on the remaining term, current interest rates, the agreed-upon interest rate, and the provider’s fees. There are also fixed-rate mortgages that can be paid off early at no cost.
Good question
Switch to a Fixed-rate mortgage?
While many providers do allow you to switch to a Fixed-rate mortgage within the term, this sounds attractive but comes with a catch: You generally have to stay with the same provider, which rules out genuine competition and usually results in significantly worse terms than if you were to switch providers entirely.
Switching is possible—but rarely ideal and usually expensive.
Basic guidelines for making a decision
SARON or Fixed-rate mortgage?
SARON Mortgage
If you’re flexible and can handle significant interest rate fluctuations, then a SARON Mortgage might be a good option for you.
Fixed-rate mortgage
If you want security and predictable costs, you should opt for a fixed-rate mortgage.
Key point
If a short-term fixed-rate mortgage is cheaper than a SARON mortgage, the fixed-rate mortgage is often the better choice.
SARON or fixed-rate mortgage?
The basics you need to make your decision, all on one page.
Make your choice: Fixed-rate mortgage or SARON mortgage?
Target audience
Who is the SARON Mortgage suitable for?
The SARON mortgage is ideal for risk-conscious homeowners with a financial cushion, for buyers with a short-term planning horizon, and for anyone who expects key interest rates to fall in the short to medium term. Most importantly, you should be able to handle interest rate fluctuations without any financial or emotional strain.
It pays to compare providers
The differences between providers are significant—they relate to margins, contract terms, and the respective models used to calculate interest rates. Click here to go directly to the Mortgage interest rate comparison.
Conclusion
Flexible, but not without risk
The SARON Mortgage offers the advantages of often lower long-term interest rates, close market alignment, and flexibility due to shorter contract terms. However, this comes with significantly higher interest rate risks, less planning certainty, and limited options for switching providers. The right choice depends on your risk tolerance and your financial situation.
Frequently Asked Questions
Answers about the SARON Mortgage
Over longer periods, SARON mortgages are often slightly cheaper than fixed-rate mortgages, as short-term interest rates are usually lower than long-term rates. However, this depends heavily on when—or during which interest rate cycle—you take out the SARON mortgage. It is therefore impossible to say definitively which mortgage loan model is cheaper overall.
Read more here: Fixed-rate or SARON Mortgage: which is better?
The SARON is calculated daily. For mortgages, however, an average over an interest period (for example, 1 or 3 months) is usually used, since interest is typically billed on a quarterly basis.
Interest is generally paid in arrears—that is, at the end of an interest period, often quarterly. The SARON interest rate plus the margin agreed upon with the mortgage lender is charged.
The biggest risk is a rise in mortgage rates. If the SARON rises, your mortgage rates will also increase, and with them your costs. Experience shows that this can happen very quickly. A typical period of rising interest rates usually lasts about three years. Interest rate hikes generally do not last longer than five years.
A SARON mortgage is suitable for people:
- with financial reserves
- with a higher risk tolerance
- who want to take full advantage of the improved interest rate environment amid generally falling rates
A framework agreement specifies the term (usually 2–5 years) and the margin. During this period, switching providers is not restricted. There are also SARON mortgages without a fixed term.
Yes, many providers allow you to switch. In some cases, switching involves costs. However, you usually have to stay with the same provider, which limits competition and can significantly increase interest rates depending on the provider (weak bargaining position).
In practice, the SARON is often capped at 0%. This means you pay at least the bank’s margin and do not benefit from negative interest rates. When interest rates are negative, this is a major disadvantage of the SARON Mortgage.
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