What do they mean? How do they work?
When buying a property in Switzerland, the rate is a key element to understand. The rate is the percentage of interest you will have to pay on your mortgage and it can significantly impact your monthly payments and the total cost of your property purchase.
What is a rate?
The rate is the percentage of interest you will pay on the borrowed (mortgage). It is determined by several factors, mainly the current market interest rate and the risk profile of the file.
It is set by the bank or financial institution granting you the loan. It will be either a short-term rate (Saron, rollover) or a long-term rate (fixed rate).
How does a rate work?
The rate is applied to your mortgage balance to determine how much interest you will have to pay quarterly. For example, if your rate is 2% and your mortgage balance is CHF 500,000, you will have to pay CHF 10,000 in interest each year, or CHF 2,500 per quarter. The rate can also impact the total cost of your property purchase because the higher the rate, the more interest you will pay on your mortgage.
There are several options available to you once the financing has been agreed:
- A 3-month "short-term" rate that will give you more flexibility and/or
- A long-term rate to protect your budget over the chosen period.
Our experts will help you value your property and choose the right financing solution.