Mortgage, when it is convenient to pay it off (with savings or by selling Btp): the accounts to be done
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Mortgage, when and how to pay off?
Mortgages can be extinguished, in whole or in part, without costs and without the bank being able to oppose it. But having some savings, because when the mortgage was taken out the cost was so low (here the data on the price increases) that it was not worthwhile to divest money already employed or because one received a substantial severance pay or an inheritance, it is worth using the money to pay off an ongoing loan? The seemingly trivial answer: yes, when the savings are used at a lower rate than the one paid on the mortgage. The trouble is that this answer works, and from a strictly arithmetic point of view, only when the comparison can be made on certain bases, and that is when the fixed-rate mortgage and the savings are employed (or are thought to be employed) in a financial instrument in turn at a fixed rate and with a certain amount of repayment: the typical case is that of BTPs held to maturitybut beware the discussion immediately falls apart if instead of a fixed rate the BTPs are indexed to the inflation rate.
May 15, 2023
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