why would you say so?
all such mortgages have the option to switch to a fixed one with the same provider (although the rates might not be the best)
And a 3 month one has an option to swicth to a fixed one with any provider. What you are highlighting is not a feature but a limitation.
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Why not unlimited duration? You can get this at UBS at a similar margin.
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agree 100% but almost all providers have moved to a 3 year duration unless you pay a premium on top to keep it open.
are there competitive rates for SARON with a flexible rolling contract?
It goes both ways: my 3-month SARON contract was recently changed from the bank side, which raised the margin. Had I picked the Raiffeisen SARON offer (fixed for 3 years, which I also saw as a drawback), Iâd be paying 0.24% less right nowâŠ
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Yes, you are exposed to the ups and downs, although I think it has historically been unusual for banks to force you to take a higher margin.
Of course, you can find another bank and switch away again unless the bank you are with is the lowest margin you can get.
Agreed, we got a 0.68 % margin for unlimited term.
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I am too lazy/busy to shop aroundâŠ
I bought a property at an auction worth around 600k for 500k and got a loan of 450k from Raiffeisen, not sure whether UBS or any of the other banks would offer me that too at a similar margin with the flexibility. Also generally Iâve heard that margin might increase in the future due to Basel III so Iâm thinking it might be not that bad to be âlocked inâ for 3 or 5 years, but Iâm still unsure.
When and where did you manage to get this? Based on my research recently it has become really difficult to land such good deals (VIAC increased margin from 0.65% to 0.8%, Migros from 0.8% to 1% etc.)
UBS. No bargaining, no back and forth, just a good personal relationship with our banker. He understood our situation, did a detailed evaluation of our financial situation (investment assets, portfolio, etc.) and then made us an offer. We were happy with this and signed the contract. It did take a long time tho - approx. 4 months from start to finish.
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Hello everyone,
I want to submit my application for my first mortgage with VIAC. I would like to ask about the current trends and your recommendations.
Would you suggest going for a fixed-rate mortgage or a money market (SARON) mortgage at the moment? Or perhaps a mix of different tranches would be better?
Additionally, I have a question to make sure I understand correctly: if the âAbschaffung Eigenmietwertâ comes into life, it will be more cost-effective to invest as much as possible at the start (as âEigenkapitalâ), right?
Thank you in advance!
Statistically youâll generally pay less with a Saron mortgage in the long run and I would therefore recommend you to go with Saron if youâre financially flexible enough. If youâre tight on budget and/or could not stomach potential interest rate spikes and value the security, then go with a fixed-rate mortgage. Concerning the Eigenkapital I would recommend you to use as little Eigenkapital as possible as you can always invest your extra cash/Eigenkapital into the stock market which will yield a much higher return than the mortgage independent of any potential tax savings depending on the outcome of the initiative which will have a much smaller impact than having extra money invested at 5-10% per year.
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Depends on you. SARON should be cheaper in the long run, but youâre exposed to risk. Fixed-term (like 10 years) give you certainty to plan for some time, but comes at a cost. Any (expected) âtrendâ will be priced in or pure luck due to timing.
Only relatively, and âcost-effectiveâ is not the wording Iâd use.
Say youâd get a mortgage at 1.5%, today, it might be a net 1%. Without tax deductions, 1.5% net would obviously be higher, but still relatively low in historic comparison. Again, depends, on your financial means and preferences and other alternatives to use that equity.
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Thanks for your reply.
Yes, in the long term SARON will probably be cheaper. The mortgage increase shouldnât be a big burden on our budget, so we will most likely go towards SARON. A potential increase in the interests by a few hundred francs per month is acceptable.
You are right regarding the âEigenkapitalâ. I had only considered the possible tax costs and interest payments, but I didnât think about that, that I could invest that money. I think it would be a good idea to add it to our retirement portfolio in a simple ETF, for example, ACWI.
If you have more tips or advice, please share them.
It can be up to 1k more each month or even more, in the most negative scenarios. But still, on the long term you will be paying less with SARON vs. fixed. Itâs just about the capability to manage that potential cost for a specific period, knowing itâs still the cheapest scenario. Else, you just accept paying more for a fixed mortgage to avoid that risk. That being said, we went for SARON, but I took the fixed rate as reference at the time we took the mortgage, and I am saving the delta (current SARON vs. fixed we would have gotten back then) for ââdarkerââ times.
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As always, this is one of the best threads Iâve come across on mortgages.
Finally, after 2 years of searching and bidding, weâve now secured a property 
Iâm now actively exploring mortgage options. As I am a long-term, risk-tolerant investor with headroom for interest rate fluctuations, I am leaning toward going fully SARON-based.
I would also like to minimize how much equity (âEigenkapitalâ) I put down, and use indirect amortization via a 3a investment vehicle. Both my partner and I have Pillar 3a with VIAC, which makes that feel like the obvious route. But the current numbers are discouraging: VIAC via margin is 0.80% for a 3-year lock-in 
, whereas Swissquote offers 0.55%.
From what Iâve read in this thread, it seems we wonât be able to pledge or amortize with 3a in our case. So Iâm stuck without a strong option.
Where would you suggest I start looking, or what questions should I be asking next?
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Their website says:
-
Loan repayments are determined by the bank and must be made quarterly in equal instalments. You may make indirect repayments via pension assets (Pillar 3 with Luzerner Kantonalbank).
A linked account will be opened with Luzerner Kantonalbank for the purposes of debiting interest and repayments and handling the mortgage. It is the clientâs responsibility to ensure that funds for interest and repayments are provided on time. The linked account must not be used to invest liquidity. LUKB is entitled to charge liquidity holding fees (negative interest) if the product is used in any other way
So worth checking the terms and compare the (probably worse) product of LUKB with the better margin compared to VIAC with worse margin.
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I received an offer for a 10-year fixed mortgage with a 1.45% interest rate and seem like the best the brokers could get. The bank also allow to take part of the mortgage as SARON with a 0.9% margin for a maximal of 3 years.
Given the current interest rate situation in Switzerland, how should I be thinking about this?
My basic approach to compare is to look at:
- fixed mortgage: 1.45% x mortgage x 10
- SARON: X% x mortgage x 3 + Y% x mortgage x 7 (where X is 0.9 for now but can only go up during these 3 years and Y is what I could get in 3 years)
For SARON to make sense assuming the best scenario we stay at 0% (i.e. X=0.9) I would need to get a 1.68% rate on a 7-years mortgage (the same bank would currently offer this with 1.28%).
For the fixed mortgage, it sounds like in the case where the rates stay as they are today I would lose roughly 3% of the mortgage amount in total. If rates go up to 0.3-0.5% it would pretty much be the same, and if it gets higher than that I should have taken the fixed mortgage.
So I am leaning towards just taking the fixed mortgage. In particular I may reduce my revenues during the upcoming 3-year period and if I have to handle a mortgage renewal it may be annoying.
Am I underestimating the difference? Something else I should be accounting for?
says this is a rather bad SARON margin and an ok-ish fixed mortgage. You sure, you canât get a better one? Some months ago, I got a new SARON mortgage for 0.75% margin.
In general, a SARON mortgage has a better expected return. Are you really dependent on rates being fixed at a lower rate? If the answer is no, use a SARON mortage, do not split your mortgage and always switch to the cheapest (and trustworthy) provider.
If the answer is yes, just know that you not fixing that âyesâ costs you that difference.