A fixed-rate mortgage to guarantee the stability of your property loan

Becoming a homeowner is a dream for most of us. But you still need to find the best financing! In a context of low but volatile interest rates, the fixed-rate mortgage is attractive for its security. But under what conditions? And for whom? Our experts provide their insights to help you make the best choice based on your situation.

What is a fixed-rate mortgage?

A fixed-rate mortgage fixes the interest charges for the entire term of the contract, generally between 2 and 15 years. Unlike a variable-rate mortgage, which is indexed to money market rates (SARON mortgage), a fixed-rate mortgage secures the interest expense, regardless of future fluctuations in key and bond rates.

This predictability comes at a cost: fixed rates incorporate a risk premium, reflecting the anticipation of long-term rates. The longer the term, the higher this premium. A 10-year fixed-rate mortgage will therefore be more expensive than a 5-year fixed-rate mortgage, which in turn will be more expensive than a variable-rate mortgage. Barring an extreme inversion of the yield curve.

Who is a fixed-rate mortgage for?

A fixed-rate mortgage is suitable for borrowers who prioritize:

• Budget security: interest rate and duration known in advance.
• Rate independence: immunity against sharp increases.
• Peace of mind: no stress in the event of a downturn.

It is particularly recommended for households with stable but limited incomes, limited savings capacity, or those with long-term debt. The challenge is to be able to meet your mortgage payments no matter what.

Conversely, a fixed rate is less attractive for active investors seeking to optimize their short-term financing costs and who are financially strong enough to withstand rate increases.

How to choose between a fixed rate and a variable rate?

The advantages of a fixed-rate mortgage

• Long-term stability and visibility of monthly payments
• Hedging against future risk increases
• Peace of mind and simplified financial management

The Disadvantages of a Fixed Rate Mortgage

• Additional initial cost compared to a variable rate
• No gain in the event of a drop in key rates
• Early exit penalties are often dissuasive
• Complex renegotiation before maturity

The choice therefore depends on your sensitivity to interest rate risk, your expectations for changes in income and expenses, your debt horizon, and your wealth objectives. A comprehensive audit is often necessary to identify the best strategy.

What is the ideal term for a fixed-rate mortgage?

There is no universally optimal duration. It all depends on your situation and your risk tolerance:

• A long-term fixed rate (15 years or more) offers maximum security, provided you are certain of keeping the property! Otherwise, beware of early repayment penalties. And be wary in the event of a lasting reversal in long-term rates.
• An average rate (8-12 years) offers a good compromise between visibility and flexibility for many “standard” households. But it does not protect against a sudden increase at the end of the term.
• A short-term rate (2-5 years) is more opportunistic. It allows you to “surf” on short-term market opportunities. But it requires you to actively manage your debt and have the means to absorb a sudden increase.

The ideal is often a reasoned “mix” of fixed durations to smooth out the refinancing risk over time. But only a true asset assessment can determine the correct distribution.

Choose between different fixed rate offers

Evolution of current market rates (2025)

Despite the recent drop in key rates, Swiss mortgage rates remain at historic lows at the start of 2025. For a 10-year prime fixed rate, the best institutions are posting rates around 1%. And below 0.8% for a 5-year fixed rate! Unprecedented.

This abundance of liquidity is fueled by central banks’ ultra-accommodative monetary policies. Their priority is to support the economy in the face of deflationary fears. As a result, negative rates are pushing banks to lend, including over the very long term.

But beware of sudden trend reversals! Term premiums remain low (10-year – 2-year spread less than 50 points). Caution is therefore advised regarding excessively long durations. Borrowers should factor in scenarios of tension on long-term rates when making projections.

Main players in the mortgage market

Swiss mortgage services are dominated by large universal banks such as UBS, formerly Credit Suisse, and Raiffeisen. Cantonal banks also play a key role, however.

“Low-cost” models are only just emerging, via online players like Swissquote. Insurers and pension funds remain niche players, focused on their members or affiliates.

Finally, intermediaries such as mortgage brokers are gaining ground. They take charge of finding financing, compare offers and put establishments in competition.

Criteria to consider when choosing a bank

Beyond the nominal rate, multiple parameters impact the real cost:

• Rate review frequency (3, 6, 12 months)
• Interest calculation basis (30/360 or 30/365)
• Flexibility of early repayments
• Transferability of the mortgage to a third party

Not to mention the additional costs (application, appraisal, release) that can inflate the final bill! Having the right comparative reflexes is therefore essential.

The differences between the rates offered by banks

By 2025, fixed-rate spreads between institutions will exceed 50 basis points. For CHF 1 million over 10 years, that’s CHF 50,000 more in interest! Even between seemingly similar offers, 10 to 20 basis points are common.

These differences reflect the commercial policies and refinancing constraints specific to each institution. Deposit collection capacities, access to financial markets, regulatory ratios, margin strategies: parameters that are constantly evolving. Hence the importance of real-time management, ideally by an expert.

General financing conditions

Beyond the rate, the grant requirements can be radically different:

• Maximum loan rate (from 50% to 80% depending on the bank and region)
• Rental income or LPP premiums are taken into account
• Property value is calculated (intrinsic value, yield value)
• Indirect depreciation and single tranche are used
• Possibility of a second mortgage and bridging loan

Here again, only a personalized analysis can find the most suitable solution for each case. With a potential impact of several tens of thousands of francs on the budget!

Additional costs associated with taking out a mortgage

Institutions are competing in creativity to subtly increase the mortgage bill. Among the common but not always transparent fees:

• Application fees (up to CHF 500)
• Commitment fee (0.25% to 0.50% of the borrowed amount)
• Fund release fees (several hundred francs)
• Account maintenance fees (CHF 100 to 200/year)
• Tax certification fees (CHF 50 to 100/year)
• Transfer fees in the event of resale or transfer (up to 1% of the nominal value!)

Some offer a “flat rate,” while others charge per service. In any case, it’s best to read the fine print twice! And recalculate the total cost.

Optimize your fixed-rate mortgage

Work with an expert to get a great fixed-rate mortgage

In a market that has become illegible, only an independent expert can save you time and money. Its advantages:

• Real-time knowledge of the best offers and loan criteria
• Ability to build strong applications that maximize approval rates
• Negotiating power with banks, including your current bank!
• Advice on the optimal financing structure (terms, tranches, amortization)
• Tax simulations and optimizations to reduce final costs

In short, a true co-pilot for your real estate project. For savings that often exceed their fees!

Loan Amortization Strategies

Depreciation, yes, but how? This question strongly influences the effective cost of your loan. Two main options:

Direct Amortization

You repay a portion of the principal at each maturity date. This is mandatory for the portion that exceeds 65% of the property’s value. Direct amortization reduces your debt, but not your monthly payment! And the interest is no longer tax deductible.

Indirect Amortization

You save in a separate account or insurance policy, pledged to the bank. Your interest remains tax deductible. But with indirect amortization, you tie up cash and pay account maintenance fees. Not to mention the complications in the event of a resale.

The best mix depends on your financial, tax, and asset situation. Here too, expert advice can make a difference.

Renegotiation of rates in the event of a market decline

Even with a fixed rate, a renegotiation remains possible during the contract. Either with your bank (rare), or with another establishment.

But the cost can be prohibitive! The early exit penalty is often equal to the difference in interest discounted over the remaining term. Unless you anticipate a very sharp drop, the game is rarely worth the candle in the case of a fixed rate. And the bank has no obligation to accept.

Alternative solutions such as forward fixing may be more relevant for managing maturities in a bearish environment. It allows a new rate to be set 6 to 60 months before maturity. But there’s no room for improvisation!

Interest and early repayment management

Our tips to save a few more francs:

• Choose a 30/365 (not 30/360) interest calculation basis
• Synchronize interest deductions with salary receipts
• Make early repayments, partial or full, when permitted without penalty
• Renegotiate a reduction in the event of a significant improvement in credit scoring
• Enable/disable indirect amortization based on the tax situation

Small streams that can make big rivers over time.

Les conditions pour obtenir une hypothèque à taux fixe

Prerequisites

Getting a mortgage remains a real challenge. Prudential regulations require banks to be highly selective:

• Equity covering at least 20% of the property’s value
• Financial expense less than 33% of income (before tax!)
• At least 10% contribution in “fresh” cash (excluding LPP)
• Firm purchase commitment, ideally with bridging financing
• Applicant’s age allowing for amortization before retirement
• Professional stability, ideally a permanent contract
• No legal proceedings or acts of default

More and more applications are being rejected. There are solutions for each profile.

Minimum amount

Few banks are getting into mortgages for loans under CHF 100,000. The exception: when financing is combined with other products (multi-service package). Or for very good clients.

Below this level, resorting to consumer credit (or even leasing) is often the only alternative. With a much higher cascade of fees and interest, it’s both costly and risky.

Documents needed to take out a mortgage

Bank paperwork is an unavoidable step.

• Identity card, residence permit, family record book
• Proof of income: payslips, tax notices, balance sheet, and operating account for self-employed individuals
• Bank/postal account statements and third-pillar savings accounts
• Proof of equity: LPP statements, donations, inheritance, etc.
• Copy of the real estate sales contract, plans, and building permit
• Estimate of the property’s market value by an approved expert
• Estimate of maintenance costs and PPE charges
• Extract from the Debt Collection Register and certificate of non-bankruptcy

A mortgage expert can help you build a solid case and maximize your chances of success.

Acceptance of your file

The acceptance process takes between 2 and 6 weeks depending on the bank and the complexity of the application. One-third of applications are rejected due to insufficient credit scoring, overestimated property value, or unrealistic rental forecasts.

In case of refusal, all is not lost. A broker can help you identify the weak points in your application and represent it. A detailed knowledge of each institution’s criteria is a decisive asset.

Need advice?

Ask our experts to get the best rate!

Opaque offers, disparate conditions, administrative burden: getting the best fixed rate is a real headache. Our experts guide you and help you avoid costly mistakes.

Our mortgage specialists support you from A to Z:

• Personalized audit of your situation and your project
• Preparation of an impeccable application
• Competitive selection of leading institutions
• Negotiation of the best fixed rate and conditions
• Management of administrative formalities
• Monitoring and optimization throughout the life of the loan

All of this, free of charge. Our fees are fully covered by the bank. So don’t wait any longer: contact us for a confidential, no-obligation consultation.

Project yourself with our mortgage simulator

What is my real estate purchasing power? My borrowing capacity? The associated monthly budget? To answer these questions concretely, use our online mortgage simulator!

In just a few clicks:

• Estimate the maximum monthly payment you can afford based on your income
• Calculate the affordable purchase price based on your down payment
• Project the total cost of your loan under different scenarios
• Test the impact of early repayment or indirect amortization
• Identify the pitfalls to avoid based on your profile

This will give you a clearer picture to prepare your real estate project. So go for it: let’s get on with it and make your dream a reality!