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Fixed-rate mortgages - fixed interest rates for a secure financing plan
If you are planning to build your own home, purchase a property or carry out major renovation measures, you will most likely need a well thought-out financing plan. Fixed-rate mortgages traditionally offer the greatest planning security. The borrower and the mortgage lender agree on a fixed loan amount, a mortgage rate and a fixed term. Once the loan agreement has been signed, changes in the interest rate market no longer have any influence.
The conditions of a fixed-rate mortgage will depend on the general situation of the interest rate market. The term of the mortgage, the amortization rate as well as the income and assets of the borrower also provide important factors for conditions of fixed-rate mortgages. In addition, significant differences result from the different offers of the banks. MoneyPark stands for comprehensive advice that takes into account the mortgage market as well as your individual situation. Our mortgage advice is always independent and individual.
Today’s best MoneyPark rates
Periods of low-interest rates are an ideal time to close a fixed-rate mortgage
The monetary policy of the Swiss National Bank and the market environment are important influencing factors for the development of interest rates. They may lead to low-interest rates or make financing your own home more expensive. A fixed-rate mortgage makes it possible to use such a phase to your advantage. The extent to which interest rates of fixed-rate mortgages are subject to fluctuations becomes clear when looking at the interest rate trend in recent years:
- In June 2008, the interest rate on 10-year fixed-rate mortgages reached a high of 4.7 percent
- In December 2012, the rate fell to 1.92 percent and climbed within half a year in June 2013 to 2.53 percent
- Mortgage interest rates reached a historic low in January 2015 with 1.53 percent
What should be considered when taking out a fixed-rate mortgage?
The above rates are market averages calculated by MoneyPark. Depending on the duration of the fixed-rate mortgage, the financial situation of the borrower and the bank's terms, the interest rates can vary considerably.
Shorter mortgage terms are usually associated with lower interest rates. Most of the mortgages offered on the market have a duration between 3 and 10 years. However, banks and insurance companies also offer mortgage terms below and above these values. The interest rate of a fixed-rate mortgage is set when signing the loan agreement.
The loan amount depends primarily on the value of the property. The lower value of the market value (bank-internal estimate) and the selling price is used as the basis for the maximum loan amount. Because the property value serves as collateral for the bank, the loan amount of a mortgage does not exceed the current value of the property. In addition, the lending institutions set a buffer between the value of the property and the maximum amount of the loan amount. As a rule, banks and insurance companies finance a maximum of up to 80 percent.
The repayment / amortization period is directly related to the amount of agreed amortization payments and the term of the mortgage. The borrower and the bank agree on an annual amount of amortization payments at the beginning of the term. This amount depends largely on the additional financial burden that borrowers can carry. Depending on each case, banks sometimes allow for limited adjustments to the amortization payments to be able to react to a changed income situation.
When are fixed-rate mortgages the right choice?
Planning security and protection against rising interest rates make fixed-rate mortgages a particularly attractive mortgage model, and so the Swiss mostly use fixed-rate mortgages to finance their own homes. However, a fixed-rate mortgage may not always be the best solution. The long-term fixing of the mortgage can become a disadvantage in the event of changing circumstances, for example work-related changes or a change of residence.
With our independent financial advice, we will show you different options for fixed-rate mortgages, including the significant differences in interest rates and repayment terms. Depending on your situation, we will point out possible alternatives.
Current mortgage rates
The displayed interest rates are the best rates currently available. Your personal interest rates may vary depending on LTV, affordability, mortgage amount and the location of the property.