For members


EXPLAINED: What is Switzerland’s ‘SARON’ mortgage?

If you’ve got a mortgage in Switzerland or you’ve been reading up on getting one, you’ve probably seen the term ‘SARON mortgage’. But what does it mean and how does it differ from other mortgage systems you might be aware of?

Buying a home in Switzerland or thinking of refinancing your mortgage? Here's what you need to know. Image: Pexels
Buying a home in Switzerland or thinking of refinancing your mortgage? Here's what you need to know. Image: Pexels

Switzerland’s unique mortgage system can be difficult to work out. 

These complications are at least partially behind the country’s low home-ownership rate. Switzerland is the only country in central or western Europe where fewer than 50 percent of people own their home. 

As we’ve covered previously, the system is so complex and unique that a majority of mortgage holders do not actually pay back their mortgage – and benefit by doing so. 

EXPLAINED: Why not paying off your mortgage in Switzerland can save you money

Another complex shift took place in 2022, when the SARON mortgage replaced the LIBOR mortgage in Switzerland. 

Here’s what you need to know. 

What is the SARON mortgage in Switzerland and how does it differ from the LIBOR mortgage? 

Comparatively unique to Switzerland is the SARON (Swiss Average Rate Overnight) mortgage. 

This is not a fixed-rate mortgage. 

Instead, the rate of the mortgage is calculated according to the SARON rate, which can change daily. 

The rate you pay on a SARON mortgage is the SARON interest rate and a markup added by the lender. 

If the SARON rate is negative, then unfortunately you do not get paid by the bank. 

Instead, the effective SARON rate will be zero and you will need to pay only the markup.

SARON or LIBOR: Which is better? 

This is largely a moot point as the SARON mortgage has replaced the LIBOR one, meaning you do not have a choice between the two. 

The SARON mortgage replaced the LIBOR mortgage (London Interbank Offered Rate) at the start of 2022. 

The interest rates for SARON mortgages are variable and are calculated on the basis of the SARON reference rate. 

The SARON reference rate takes into account actual transactions in the Swiss money market.

Conversely, the LIBOR rate was calculated on the basis of recommendations from a handful of banks. 

The major benefit of this rate is that it is believed to be more transparent. 

Swiss financial advice site Moneyland points out that LIBOR had links to the “unsecured money markets” and “the SARON is considered to be less vulnerable to manipulation and more resilient to crises than the LIBOR”. 

What option is best for me?

While you will not have a choice between SARON and LIBOR, in many cases you will be able to choose between a SARON or a fixed rate mortgage. 

Whichever one of those is best will obviously depend on your personal circumstances, including your income, the purpose of the house, your intended period for repayment, the size of the mortgage and a range of other factors. 

Currently, as rates are low, you’ll benefit from a SARON mortgage, rather than a fixed rate one, although if rates rise significantly then you’d likely be wishing you had fixed your rates. 

In many cases, your bank or lender will allow you to convert your mortgage from fixed rate to SARON (or vice versa). 

More information about how to save on a mortgage in Switzerland is available at the following link. 

EXPLAINED: How to save on your mortgage in Switzerland

Please keep in mind that this was written as a guide only and should not take the place of qualified financial advice. 

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For members


Cost of living: How you can beat Switzerland’s inflation blues?

With inflation, and consequently the cost of living, continuing to rise, many consumers find it necessary to spend less than they used to. But is it possible to cut the cost of living in an expensive country like Switzerland?

Cost of living: How you can beat Switzerland's inflation blues?

In April, Switzerland’s inflation rate stood at about 2.6 percent, but it climbed to 3.4 percent in June.

That’s a significant increase, but the good news (at least for the Swiss) is that this rate is still lower than in many other countries in Europe, where it hovers around 8.6 percent.

Nevertheless, Swiss consumers have noticed that their already high cost of living is climbing upwards in line with increasing inflation, and many commonly used products and services have become even more expensive in the past months.

READ MORE: Seven products that are becoming more expensive in Switzerland

It is, however, possible to cut the cost of living somewhat and save money in the process.

Switzerland’s Blick newspaper asked a consumer expert to offer some common-sense tips to help households in Switzerland get more bang out of their franc in these inflationary times.

These are some areas where costs can be cut:


According to Sara Stalder, director of the Foundation for Consumer Protection, “it is worth examining your insurance portfolio”, to see where savings could be made.

As health insurance premiums are among the highest expenditures of a typical household, switching to another carrier could cost you less.

You won’t be able to switch until January 2023 (notifying your insurance company of the change by November 30th), but if you do your research now, you’ll be able to save as much as several hundred francs in annual premiums per person in the new year.

READ MORE: Why Swiss patients pay too much for healthcare

Calling and internet

While the costs of telecommunications (internet, mobile phones) have not risen significantly in Switzerland, Stalder advises to seek out “interesting offers that are only available to new customers.”

Also, since streaming services could become more expensive in the near future in the aftermath of the May 15th referendum, this may be a good time to examine whether some platforms you subscribe to (Netflix, Apple TV, Amazon Prime, etc.) should be cancelled.

Weeding out your streaming platforms will cut costs. Photo by freestocks on Unsplash

Credit cards

As The Local reported on July 4th, there are significant differences in annual costs of credit cards, and you can save quite a bit by switching from one card to another.

A recent study by an independent online comparison service Moneyland showed that “occasional users could save 560 francs and frequent users could see savings of more than 830 francs in the first two years if they were to switch to cheapest cards”.

You can find out more about credit card savings here:

Huge differences’: How you can save money on Swiss credit cards

Buy seasonal products

We have gotten used to having a variety of fruits and vegetables available all year round, but this convenience comes at a price.

Fruits and vegetables that are not in season in Switzerland right now (for instance, strawberries and grapes) are imported and therefore more expensive than local produce.

However, many grocery shops have special promotions on fruits that are in season in Switzerland right now, so this staying away from imports could be another way to save money.

And while you are shopping… avoid prepared foods

Sure, it’s easier to pick up a bag of grated carrots than buying them in bulk and grating them yourself, but the price difference could add up if you are used to buying ready-to-eat ,pre-packaged food rather than preparing it yourself.

This may require a change in habits but could also save money in the long-term.

A money-saving move. Image by DaModernDaVinci from Pixabay 

This may be a no-brainer but we have to say it anyway: save on energy!

Energy prices have skyrocketed since Russia invaded Ukraine in February 2022 and are expected to soar further.

READ MORE: Switzerland faces 20 percent increase in electricity costs

As these costs constitute a major expenditure in a household budget, reducing your energy costs is essential, especially if you are a home or apartment owner and have to pay these charges yourself.

These are some ways to reduce your energy consumption, according to a consumer site

  • Use heat in moderation, setting the temperature according to the size of the room and how often it is being used. Unoccupied rooms should not be heated at all.
  • Turn off the light when leaving a room (this advice is logical and reasonable, and yet many people neglect to do so).
  •  Shut down electrical appliances such as TV and computers completely when not in use, or even unplug them altogether.
  • Use appliances with the energy label “A”, LED lamps and energy-saving bulbs, avoiding devices with high energy consumption, such as aquariums and fans.