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Old 11.01.2017, 11:20
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Re: Mortgage tips and risks

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One final note on the advice bit, I'd be very careful with advising friends with major decisions like this.

You can only make them aware of the risks and the potential pitfalls, they have to weigh that up themselves and make the decision without your influence.
Definitely a good tip. After this topic I will be more cautious with recommendations. But still, if their only alternative is savings account, then maybe a moderate mortgage is not the worst idea, taking into account the tax savings.

Talking about tax savings, which option is better? If they have 300'000 and buy a flat worth 900'000:
  • put all 300'000 as capital and take 600'000 mortgage
  • put only 200'000 as capital and take 700'000 mortgage, keep 100'000 for emergencies

In case 2, is there a low risk fixed income investment with better returns than savings account? Also, after you take the mortgage, when you acumulate savings, is it better to:
  • use savings to reduce the mortgage each month
  • not pay off the mortgage at all, investing the savings into some fixed income investment
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