Yeah, my words were not correct. I meant amortization as paying off the mortgage after the mandatory part.
Indirect ammortization is something I’m not too keen on. The last time I checked the fees were atrociously high (indirect 3a via life insurance).
So are we certain, paying off a house/flat doesn’t make sense?
As far as I know, amortization through indirect 3a via life insurance is not the only alternative available…
But you are right the fees are extremely high, however as I mentioned it is not the only alternative
First of all, there no such answer as yes or no, it depends on your situation, on the interest rates, on the stock market, on the impact of your death or the death of your wife/husband on your financial situation.
I just like to remember that my father use to pay 8% interest for the mortgage of our house.
For the sake of completeness, you must have 20% in equity to be able to buy a house/an appartment. But in this case, you have 15 years to amortize 15% and reach the 35% equity (obligatory). Alternatively, if you pay 25% upfront in equity, you have 15 years to amortize the residual 10%.
I amortized directly into cash-based 3a at UBS for the first 3 years of my mortgage (also at UBS).
I now switched to direct amortization and my 3a to VIAC. One thing I did not want to do is have my amortization-pledged-3a in stock funds (UBS offers up to 75% stocks).
In case of a market crash, the likely outcome is a double whammy (loss of investment value and loss of apartment value) and a proportionally increased risk of margin call.
I have to amoritze to go down to 65%, but when I will refinance I will go up to 80% again. The money you get for a mortgage is extremely cheap. I do not know any other way to get money at rates so close to libor. And your investments should yield more than you pay to the bank, therefore I take us much money for the mortgage. Just ensure not all your money is in real estate, it may crash and then you need to be able to present some cash
Well, your other investments might crash at the same time and then you would still have to take a loss if you do not want to sell the house (at a loss). I plan to slowly repay back my mortgage, at least down to 50% within my 10 years mortgage.
put 400’000, but you buy a flat worth 1’200’000
I keep looking at examples like this in regards to the original thread title.
In general I think that working more than 25 years just to pay down a house is crazy. Its just a structure of bricks with colorful paint on it.
And that 25 years is based on yearly savings of 30000 which I dont think most middle income families have so they will probably have to work more than 30 years to pay that thing off. Some don’t even manage that and they retire with a mortgage at 65 and then have trouble refinancing.
When I hear stuff like this I just keep shaking my head. Its just a house, you probably dont even need all that space.