No, all the banks advised us rather to take one to buy it and the increase it further (based on our affordability, project, etc.)
How can paying everything give you more wealth tax?
If you use 100 to pay-off a debt or if you keep the debt and instead invest 100 in equities you still have the same amount of net taxable assets, don’t you? even better, the house value for taxable purposes may be less than 100.
What you could also do is to put 35% downpayment down. By doing this you will only have the 1st mortgage and not the 2nd (and 2 different interest rates on them). If you only do a 20% downpayment you will have the first mortgage (the one you don’t have to repay) and the second mortgage (the one that you have to amortize).
We have only the first mortgage as we did do the 35% downpayment, as a result we pay 450 CHF a month in interest.
The tax aspect is actually quite irrelevant, I calculated our tax burden with and without mortgage, and what I save in taxes is actually pretty much exactly the same amount I pay for the mortgage.
Wealth tax, goes up once you don’t have the debt anymore, but if you are thinking about a 80% downpayment it won’t make a big difference to your wealth anyway TBH…
I think the only rationale to take a mortgage and don’t repay it is if you want to invest the money instead.
However, my thinking is: would you borrow money so that you are able to invest? I wouldn’t, and until you don’t cancel your debt with your mortgage company you are actually investing money that doesn’t belong to you. We have 7 years to go on our mortgage, but we are planning to repay it in full. I really like the idea of owning my own house with 0 debt to anybody.
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When borrowing comes that “cheap”, I believe it is worth the (re)consideration of that principle.
That’s correct. Probably lots of people are actually investing on margin (via their mortgage) without being aware of. So, better being a bit careful…