Understanding the difference
A fixed-rate mortgage locks the interest rate for 2-15 years. A SARON mortgage tracks the 3-month compound SARON rate plus a bank margin, fluctuating every 3 months. Historically over 25 years, SARON is cheaper on average — but volatile.
10-year scenarios
On a CHF 800,000 loan, 10-year fixed at 2.10% = CHF 16,800/yr interest, 10y total CHF 168,000. Average SARON 1.50% + 0.85% margin = 2.35%: CHF 18,800/yr, total CHF 188,000. But if SARON drops to 1% for 5 years, total falls to CHF 156,000. SARON's bet: rates stable or falling.
Simple decision rule
Pick fixed if: (1) you want total security, (2) your budget can't tolerate higher payments, (3) long rates are historically low. Pick SARON if: (1) you tolerate volatility, (2) you have a financial buffer, (3) you plan to sell or repay early within 5 years.
Hybrid option: 50/50
Increasingly popular: split your mortgage in 2 tranches, e.g. CHF 400k fixed 10y and CHF 400k SARON. Balance security and opportunity. Downside: more complex, some banks charge extra fees.