For homeowners – or those who want to become one – the situation on the financial market is currently attractive: interest rates are low and an increase is not on the horizon. Anyone who finances their property with a mortgage can benefit from good conditions. The favorable interest rates can also be secured for the long term: with a fixed-rate mortgage, the interest rate remains unchanged over a term of up to ten years and can be calculated in the personal budget. Around three quarters of property owners with a mortgage therefore also choose this financing option.
And what do the remaining 25 percent of mortgage borrowers do? You choose a variable rate mortgage, the flexhypothek. With this financing, with a term of either two to five years, the interest rate is reset every three months. The basis for this is the SARON (Swiss Average Rate Overnight) money market interest rate. The SARON is calculated and published daily by SIX Swiss Exchange. So that customers with a flex mortgage do not receive an interest statement every day, an average is calculated every quarter, which is then retrospectively used as the current interest rate.
But what does such a flex mortgage bring to borrowers? You benefit from attractive and transparent interest rates. You can also switch to a fixed-rate mortgage at the end of the respective interest period. Since the SARON is currently around – 0.7 percent, only the bank’s margin is currently to be paid. This remains so as long as the SARON is in the negative range. There are currently no signs of a rise in interest rates.
Should interest rates rise anyway, the customer can convert the flex mortgage into a fixed-rate mortgage every quarter – i.e. at the end of each interest period. The term of the newly concluded fixed-rate mortgage must at least correspond to the remaining term of the superseded flex mortgage.
Flex mortgages are particularly suitable for borrowers who are striving for a very good price-performance ratio and who do not get nervous immediately when there are small market movements. But they can also be combined with a fixed-rate mortgage: Part of the real estate financing can be easily planned over a longer period and the other part allows you to benefit from the currently very attractive interest rate environment: security and flexibility in an individually tailored package.
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