Managing your Swiss mortgage: fixed vs SARON, amortisation, renewal
Once you own, the live decisions are: which mix of fixed and SARON tranches to hold, when to renegotiate, how to amortise (direct vs indirect via pillar 3a) and how to plan tranche maturities so they don't all renew in the same year. Start the next-tranche conversation 12-18 months before the maturity date - lenders allow forward fixing.
Overview
A Swiss mortgage is rarely 'set and forget'. Renewals at the same lender feel automatic but rarely deliver the best rate - the moment of leverage is 6-12 months before maturity, when you still have time to put two offers side by side.
Optimising your existing mortgage
- 1
Audit your current loan
List every tranche: amount, rate, type (SARON or fixed), maturity date, lender. Note overall loan-to-value, your current pillar 2/3a equity used, and the imputed rental value on your last tax assessment.
- 2
Decide your fixed/SARON mix
Common patterns: 100% SARON if you want lowest expected cost and accept rate volatility; 50-70% fixed plus 30-50% SARON for a balance; 100% fixed if a single rising-rate year would stress your budget. Reassess every renewal.
- 3
Ladder the maturities
If you have two or more fixed tranches, stagger maturities by 2-4 years so you never refinance the whole mortgage at one bad point in the cycle. A 5/7/10 ladder is a typical structure.
- 4
Re-evaluate direct vs indirect amortisation
Indirect via pillar 3a: bigger tax deduction and 3a build-up - usually best for high earners well before retirement. Direct: clears debt faster and reduces interest cost - often better as retirement approaches or for households outside the highest tax bands.
- 5
Get a second offer before renewal
Cantonal banks, big banks, insurers and platforms (Moneypark, Hypoplus, Resolve) compete. Even a 0.20% rate improvement on a CHF 800,000 mortgage saves CHF 1,600/year - real money over a 10-year fixed term.
- 6
Plan for the 65 affordability test
Lenders re-run affordability at retirement using projected pension income. If the numbers don't pass, you may need to amortise faster in your 50s - model it now, not at 64.
Frequently asked questions
When should I refinance my Swiss mortgage?+
Start serious quotes 12-18 months before the tranche maturity. Most lenders will lock a forward rate 6-12 months out at no/low cost. Switching banks usually takes 2-3 months end-to-end.
Can I pay off a fixed-rate tranche early?+
Only with an early-termination fee that compensates the lender for lost interest. The fee can be substantial when rates have fallen since you fixed - run the numbers before paying off early.
Is SARON safer than the old LIBOR mortgage?+
SARON replaced CHF LIBOR in 2022. Mechanics are similar (variable, repriced quarterly) but SARON is based on actual repo transactions, so it is a more robust benchmark. Risk profile for the borrower is comparable.
Should I amortise faster than required?+
Lenders require amortisation only to 65% LTV by retirement age. Beyond that, voluntary amortisation reduces interest and tax deduction at the same time - it makes sense when your marginal tax rate is moderate and certainty matters more than tax leverage.