Mortgage vs Investment Calculator
Should you pay off your mortgage early or invest the extra money? Compare both strategies side by side with accurate German mortgage modeling and tax calculations.
FAQs
It depends on your mortgage interest rate vs. expected investment returns. If your mortgage rate is below 3-4%, investing historically provides better returns. But paying off your mortgage offers guaranteed savings and peace of mind.
Most German mortgages allow annual extra payments (Sondertilgung) of 5-10% of the loan amount. These reduce your outstanding balance and total interest paid. Check your contract for the exact allowance.
A globally diversified stock portfolio has historically returned 7-8% annually before inflation. After inflation, expect 5-6%. Conservative estimates use 5% to account for fees and taxes.
In Germany, mortgage interest on your primary residence is NOT tax-deductible. However, for investment properties, mortgage interest is fully deductible against rental income, making the comparison more favorable for investing.
When your fixed-rate period (Zinsbindung) ends, you'll need to refinance at current market rates. This interest rate risk is a key factor — if rates rise significantly, extra payments during the fixed period could save you money.
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