A mortgage does not have to consist of a single product. Many homeowners split the amount into several parts, known as tranches (Tranchen), and choose a separate model and term for each tranche. This tranche strategy spreads interest rate risk and prevents the entire mortgage from having to be renewed at a single, possibly unfavourable point in time.
The principle of splitting
With a tranche strategy, the mortgage is typically divided into two or three parts. A common combination consists of a SARON mortgage, a five-year and a ten-year fixed-rate mortgage. Each tranche has its own interest rate and its own expiry date.
The idea behind it is diversification, as you know it from investing. The SARON tranche benefits from low variable rates but carries the risk of an increase. The fixed-rate mortgages protect part of the financing against rising interest rates. And because the tranches expire at different times, the whole mortgage never has to be renewed at once on the terms then prevailing.
Advantages of the tranche strategy
- Staggered interest rate risk: If interest rates rise, this initially affects only the variable tranche and later the tranches that expire.
- No bulk renewal: If a tranche expires during a period of high interest rates, only part of the mortgage is affected.
- More flexibility: Depending on the contract, the SARON tranche can be amortised or converted more easily than a fixed-rate mortgage.
- Balanced costs: The average interest rate lies between the cheapest and the most expensive model.
Worked example
For a mortgage of CHF 900’000, we compare a split into three equal tranches with three options in which the entire mortgage is taken out in a single model. We use Voltavia Capital’s reference rates for a good credit rating and a loan-to-value ratio of up to 65 %: SARON mortgage from 1.08 %, five-year fixed-rate mortgage from 1.32 % and ten-year from 1.58 % (as at October 2026).
| Tranche | Amount | Rate | Interest costs per year |
|---|---|---|---|
| SARON mortgage | CHF 300’000 | 1.08 % | CHF 3’240 |
| Fixed-rate mortgage 5 years | CHF 300’000 | 1.32 % | CHF 3’960 |
| Fixed-rate mortgage 10 years | CHF 300’000 | 1.58 % | CHF 4’740 |
| Total tranches | CHF 900’000 | around 1.33 % | CHF 11’940 |
For comparison: the whole mortgage as a SARON mortgage costs CHF 9’720 per year, as a five-year fixed-rate mortgage CHF 11’880 and as a ten-year fixed-rate mortgage CHF 14’220.
In terms of cost, the tranche solution is therefore close to the five-year option. The difference shows when interest rates rise. If the SARON customer rate rises by one percentage point, the interest costs of the pure SARON option increase by CHF 9’000 per year. In the tranche solution, the increase only affects the SARON tranche of CHF 300’000, and the additional costs amount to CHF 3’000 per year. Two thirds of the mortgage remain secured at fixed terms for the time being.
The drawback: being tied to one bank
The tranche strategy has an important catch. As a rule, all tranches are held with the same bank, because the property is encumbered by a single mortgage note (Schuldbrief). If one tranche expires while the others still have several years to run, switching to another bank is hardly possible. Your existing bank knows this and therefore has little reason to offer particularly good terms on renewal.
A complete switch is only possible when all tranches expire at the same time, or if you accept an early repayment penalty for the running fixed-rate mortgages. Depending on the remaining term and the level of interest rates, this can be high.
How to mitigate the drawback
You can choose the terms so that the tranches start at staggered times but expire at a common later date. An example: if you have an existing five-year tranche with three years remaining, you renew an expiring tranche for three years only. After that, you can renegotiate the entire mortgage and switch banks if necessary. Also check whether the SARON tranche can be terminated on the same date.
How many tranches make sense
More tranches do not automatically mean more security. Each tranche increases the administrative effort, and some banks require a minimum amount per tranche. For most households, two or three tranches are enough. How you weight the amounts depends on your appetite for risk. If your budget is tight, fix a larger share. If you can cope well with interest rate fluctuations, you can choose a larger SARON share.
With Voltavia Capital’s free affordability calculator, you can check how much interest rate risk your budget can absorb. In a personal consultation, we would be happy to work out a split that suits your situation.