Larger downpayment or fixed-term deposit

A: 5 years mortgage rate is 1.7%.
B: Not sure if banks offer 5y deposits., but let’s assume I could get 1.2%.

Let’s say I owe 400k, that means A is 7k, while B would be 5k pre tax.
For math sake, let’s assume a constant income tax rate.

Downpayment scenario:
neto = salary - tax rate (salary).

Deposit scenario:
neto = salary - 7k + 5k - tax rate(salary-7k+5k).

I assume both scenarios have pretty similar wealth tax.

As long as your marginal tax rate is below 100% you’re better off with Downpayment scenario. :grin:
The only reason to not pay as much as possible from your mortgage would be if the return is higher than the mortgage rate, which is not the case in your example.

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It’s even worse I think. From what I hear, fixed rate is over 2% these days.

Yes, some bank official figures are 2.4%, 2.5%

My logic think if I can get more return that 2.4 is better to decrease the mortgage than in a savings account for example, same principle should apply for pledging, direct vs indirect amortization…