Variable Mortgage

In Switzerland, the term "variable mortgage" is used synonymously with the term "adjustable rate mortgage".

Swiss variable mortgages use a mortgage model in which the mortgage rate follows the overall interest environment.

The process used to calculate and set interest rates for variable mortgages is not transparent. In recent years, variable mortgage rates have remained largely unchanged in spite of the steady drops in overall interest rates. Based on the facts, it’s fair to say that the title "variable mortgages" is somewhat misleading.

As a rule, variable mortgages are open-ended, meaning they do not have a preset, agreed-on mortgage term. Current variable mortgage interest rates are shown in the moneyland.ch mortgage comparison tool.

The key feature of a variable mortgage is flexibility. In contrast to other types of mortgages, variable mortgages can often be amortized in full within a relatively short term of 3 or 6 months, without incurring early payment penalty charges.

That flexibility comes at a price: Compared to fixed rate mortgages and LIBOR-based mortgages, variable mortgages from Swiss banks and insurance companies are often (notably) more expensive.

More information:
Swiss mortgage rates compared
What is a libor mortgage?
What is a fixed-rate mortgage?
Variable mortgages in Switzerland

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