Anyone taking out or renewing a mortgage almost always faces the same fundamental question: should the interest rate be fixed for several years, or is a variable model based on SARON worth it? Both options have their merits. Which one suits you better depends less on forecasts than on your budget, your plans and how comfortable you are with fluctuating interest costs.
How the SARON mortgage works
SARON stands for Swiss Average Rate Overnight. It is a reference interest rate calculated from transactions actually concluded overnight on the Swiss money market. With a SARON mortgage (SARON-Hypothek), this daily rate is compounded over an interest period, usually three months. At the end of the period, the interest owed for those three months is known.
Your customer rate consists of two parts: SARON and the bank’s margin. The margin is fixed when the contract is signed for the duration of the framework agreement, which usually runs for two to five years. Only the SARON component can therefore fluctuate. As the Swiss National Bank’s policy rate is 0 % in 2026 (as at October 2026), SARON is currently close to zero. The customer rate therefore essentially corresponds to the margin.
At Voltavia Capital, the reference rate for SARON mortgages with a good credit rating and a loan-to-value ratio (Belehnung) of up to 65 % starts from 1.08 % (as at October 2026). The market average is around 1.35 %.
How the fixed-rate mortgage works
With a fixed-rate mortgage (Festhypothek), you agree an interest rate for a fixed term, typically between two and ten years. During this period, the rate remains unchanged, regardless of how the market develops. This provides planning certainty, but usually costs somewhat more than a variable model.
Voltavia Capital’s reference rates for a good credit rating and a loan-to-value ratio of up to 65 % are as follows (as at October 2026):
| Term | Voltavia from | Market average |
|---|---|---|
| 2 years | 1.19 % | 1.52 % |
| 5 years | 1.32 % | 1.71 % |
| 10 years | 1.58 % | 2.04 % |
Bear in mind the lack of flexibility. If you terminate a fixed-rate mortgage before it expires, for example because you sell, you should expect an early repayment penalty (Vorfälligkeitsentschädigung). Depending on the remaining term and the interest rate environment, this can be considerable.
Worked example
Suppose you are financing a mortgage of CHF 600’000 and comparing a SARON mortgage at 1.08 % with a five-year fixed-rate mortgage at 1.32 %. For the SARON mortgage, we use two scenarios: the rate stays the same for five years, or the customer rate rises to 1.80 % from the third year.
| Option | Interest costs per year | Interest costs over 5 years |
|---|---|---|
| SARON, rate constant at 1.08 % | CHF 6’480 | CHF 32’400 |
| SARON, 1.80 % from year 3 | CHF 6’480 or CHF 10’800 | CHF 45’360 |
| Fixed-rate mortgage 5 years, 1.32 % | CHF 7’920 | CHF 39’600 |
In the first scenario, you save CHF 1’440 a year with SARON, i.e. CHF 7’200 over five years. In the second scenario, the first two years together cost CHF 12’960 and the following three years CHF 10’800 each, a total of CHF 45’360. The fixed-rate mortgage would then have been CHF 5’760 cheaper.
The example shows the core of the decision: the SARON mortgage is cheaper as long as the customer rate averages below 1.32 % over the five years. If it rises above that, the fixed-rate mortgage becomes the cheaper solution. Nobody can reliably predict which scenario will occur.
Which model suits whom
A SARON mortgage is more likely to suit you if the following points apply:
- Your budget can cope with significantly higher interest costs without jeopardising affordability (Tragbarkeit).
- You want to remain flexible because a sale, a move or a larger amortisation is possible in the next few years.
- You follow interest rate developments and can switch to a fixed-rate mortgage if necessary. Many banks allow such a switch within the framework agreement.
A fixed-rate mortgage tends to make more sense if these points predominate:
- You want to plan your housing costs precisely over several years, for example because your budget is tight or there are children in the household.
- You are likely to stay in the property for a long time.
- A rise in interest rates would put a heavy financial or emotional strain on you.
When choosing the term, it is worth looking at the interest rate difference. There are currently 0.26 percentage points between five and ten years. That is the premium you pay for an additional five years of certainty.
Combinations and notice conditions
You do not have to choose a single model. Many homeowners split their mortgage into tranches, for example part as a SARON mortgage and part as a fixed-rate mortgage. This way, you benefit partly from low variable rates while protecting part of the mortgage against rising rates.
With a SARON mortgage, you should also check the contract details carefully. Notice periods and the conditions for switching to a fixed-rate product vary from bank to bank. Equally important is whether the margin is renegotiated when you switch. Also check whether the bank applies a minimum rate if SARON falls below zero.
With a fixed-rate mortgage, you should know the rules on early termination. Some banks allow the mortgage to be transferred to a new property when you sell, while others always require a penalty.
Conclusion
The SARON mortgage is currently the cheaper entry option, but carries the risk of rising interest rates. The fixed-rate mortgage costs somewhat more, but in return offers fixed costs over the entire term. The decisive factors are how much interest rate risk your household budget can absorb and how long you are likely to keep the property.
If you would like to check how different interest rate levels affect your budget, you can use Voltavia Capital’s free affordability calculator. We would also be happy to assess your personal situation in a consultation.