We use cookies to make its website more user-friendly, secure and effective. Cookies collect information about the use of websites. Further information: Information on data protection
Saron mortgages. Maximum flexibility.
What is a SARON mortgage?
A SARON mortgage is based on the SARON (Swiss Average Rate Overnight) reference interest rate, which is an interest rate that is updated daily to reflect current market conditions. This transparent link to the market ensures that, in most cases, the interest rate is adjusted in line with financial market trends on a quarterly or semi-annual basis. Saron mortgages are considered to be the most cost-effective form of financing over a long period of time. Borrowers benefit directly from falling interest rates; however, they must also have a certain level of risk tolerance and sufficient capital reserves in order to absorb large fluctuations in interest rates.
What is the rate for a Saron mortgage made up of?
The interest rate for a Saron mortgage is made up of the three- or six-month average of the current SARON reference interest rate and an individual margin set by the lender. The differences in rates offered by different lenders are primarily due to margins, which is why it’s important to compare a wide range of providers. Good creditworthiness, in other words, a low loan-to-value ration and affordability below 33%, can help with negotiating an attractive margin.
How is the Saron reference interest rate calculated?
The SARON (Swiss Average Rate Overnight) is calculated based on transactions actually carried out on the Swiss money market. It reflects the interest rates at which banks are prepared to issue unsecured, short-term loans overnight. The SARON is published daily at 6 p.m.
What others wanted to know.
Our mortgage experts give an insight into a selection of the most frequently asked questions. Submit your own question. We will be happy to help you.
Charline B. (32), Muri bei Bern
What are the disadvantages of a Saron mortgage?
Saron mortgages are commonly tied to a framework agreement which can last several years. As well as this, there is typically a minimum amount which, depending on the lender, amounts to around CHF 100,000. What’s more, fluctuations in interest rates entail substantial risk. If market interest rates increase, the Saron reference interest rate can also rise sharply within a short space of time, making the mortgage considerably more expensive. This uncertainty necessitates a high risk tolerance and the right level of capital reserves in order to be able to cope with the interest rate fluctuations.
Eldin E. (32), Thalwil
Who is a Saron mortgage suitable for?
Saron mortgages are suitable for borrowers with a high risk tolerance, sufficient capital reserves and a great need for maximum flexibility and a market-linked interest rate. They represent a sensible option whenever a high degree of flexibility is needed, for example during construction phases when the final mortgage amount is not fixed from the beginning, if the property may be sold, if there is an expected inheritance payment that will be used to amortise the mortgage or as a short-term financing option.
Charline B. (32), Muri bei Bern
What are the disadvantages of a Saron mortgage?
Saron mortgages are commonly tied to a framework agreement which can last several years. As well as this, there is typically a minimum amount which, depending on the lender, amounts to around CHF 100,000. What’s more, fluctuations in interest rates entail substantial risk. If market interest rates increase, the Saron reference interest rate can also rise sharply within a short space of time, making the mortgage considerably more expensive. This uncertainty necessitates a high risk tolerance and the right level of capital reserves in order to be able to cope with the interest rate fluctuations.
Eldin E. (32), Thalwil
Who is a Saron mortgage suitable for?
Saron mortgages are suitable for borrowers with a high risk tolerance, sufficient capital reserves and a great need for maximum flexibility and a market-linked interest rate. They represent a sensible option whenever a high degree of flexibility is needed, for example during construction phases when the final mortgage amount is not fixed from the beginning, if the property may be sold, if there is an expected inheritance payment that will be used to amortise the mortgage or as a short-term financing option.
