Hi there,
With raising interest rates and European central bank not planning on stopping, I started thinking if I can come up with more efficient way of handling my debt.
I have a mortgage in EUR in my home country for an apartment.
- 26k EUR left to pay off (no fees to pay off earlier)
- 200 EUR/month principal
- 90 EUR/month interest (now 4.3% APR, updated every 3 months)
I moved to live in Switzerland, so my salary is now in CHF.
Savings rate around 4k/month and I dump everything in stocks. Stock portfolio is around 300k now.
Recently I bought a car using margin loan. 6k CHF left to pay off.
No other debt. There is no tax advantage to keep debt as well.
I am thinking of few options:
A. Do nothing.
- Keep paying mortgage as it is 290-300eur/month
- Finish paying off margin loan and keep investing
This way I would pay 1.1-1.2k EUR per year in interest as per current interest rate.
B. Try paying off mortgage faster
- Finish paying off margin loan
- Take out 26k CHF margin loan, covert to EUR (1:1 ratio now) and pay off the mortgage completely.
- Pay off margin loan in bigger chunks (2k or more per month)
- Keep investing the rest of the money
This way I would pay probably around 300-400 CHF per year in interest on margin loan, which would be gone in around 1 year.
Option A seems fine because it is quite stable, payments are spread during many years although with bigger interest, but I can invest in the market at full speed.
I like option B too, because I convert debt into more flexible one, where I can speed up paying off if necessary and also CHF margin loan interest is lower (2.3% vs 4.3%). Downside is that I might miss out an opportunity in the market in case recession is called off :)
Submitted February 07, 2023 at 06:05AM by Efficient_Ladder6624 https://ift.tt/loGE0yg
