Behind the technical term 'swap' is one of the most important pillars for Swiss mortgages. While SARON is often referred to as the money market, swaps are the benchmark for fixed-rate mortgages. But exactly what is being exchanged here and why does it affect your interest rate?

In Switzerland, a mortgage is first calculated based on the relevant lending value of the property and the available equity. The starting point is not the purchase price alone but the lending value (Belehnungswert), which the bank derives conservatively from the market value. From this follows the maximum financeable share, usually up to about 80 percent of this lending value. The remainder must be provided as equity, with a minimum portion of so‑called hard equity not allowed to come from the pension fund. In addition, acquisition incidental costs such as notary, land register and, depending on the canton, property transfer taxes apply and must be taken into account in the budget.