Special repayment, saving or consumption?

Yeah, reserves are good. With us, a small low six-figure amount. You never know what’s coming.

.. Yes I know.. in good times (like now) it's easy to be a smartass, sorry If things ever go down only then you get scared..

Right I can only confirm that. At our bank everyone, even the janitor, was the most successful (spec)ulator and was also greedy with little brains

For us, a small low 6-figure amount.

That would have almost or even fully paid off the house for me.

But in the end, there remains the high residual debt, with an unknown interest rate at which it will be further financed.

We could reduce our repayment from 5%, but we would even repay more if we were contractually able to. For this, we use the option to make a special repayment of 9,250 euros annually so that we finish faster.

I would actually be interested in why you would do it differently.

I have a fixed interest rate for 20 years and, mathematically, you should be done after about 30 years if I remember correctly. That’s enough. I don’t need to set a speed record, I can live very well with my debt because it doesn’t overwhelm me. We have a monthly surplus of over 1,000€, despite the house.

Last year, we faced the question of making a significant special repayment. It would have saved us 10,000€ in interest over the remaining term. The decision went against it, reason see above. Instead, it went into the portfolio and generated a return of about 3,500€ after taxes. And it will stay there for about 17 more years now. Conservatively calculated (knowing well that no one knows the future), that will yield 20,000€, maybe more, maybe less (unlikely). But: I only do this because I still repay a significant portion of the income every month. However, I have no interest in desperately paying off the house quickly and putting all eggs in one basket. I (hopefully) still have a few decades ahead of me and investing in stocks is in my opinion an essential contribution to wealth building, because besides the roof over one’s head, you also need something to eat.

But let’s take the example of
House (unexpectedly) paid off and now wants to build a buffer for the unexpected.
On the one hand, I would consider whether really 50k should go into stocks; in my opinion, at an advanced age this is no longer the smartest idea and also not very suitable as an emergency fund because the investment horizon is too short. Perhaps splitting 10k into a daily money account, 15k into a fixed deposit ladder, and 25k into stock ETFs.

The house can be borrowed against for peanuts at any time. For that reason, I wouldn’t leave so much money lying around, 10k should be enough. Fixed deposits can also be borrowed against if necessary; otherwise, every year a portion in the ladder frees up again.

Another example: You can currently get a 10-year fixed interest loan at about 0.55% with <60% loan-to-value. Take 100,000€ and put it in a 10-year fixed deposit at VW Bank (AAA rating, full deposit insurance). They currently pay 1.3% interest.
It "costs" 212€ per month at 2% repayment, total interest cost after 10 years 5,000€. Opposed to that are almost 14,000€ interest earnings from the fixed deposit, about 11,000€ after taxes. Profit 6,000€. Effort? Sign a loan contract. The mortgage already exists, can be transferred, and should be handled with little money. That way, the next gas boiler pays for itself.

Thank you. Yes, not everything in etfs for sure. That is too risky for me.

Having more left over monthly sounds great at first glance, but if, besides the current special repayment amount, the additional capital from the freed-up installment and possibly another raise or two come in, then at some point you run out of opportunities for special repayments or installment increases, right?

If that happens, I’ll light a candle... It is always a question of how much is left and how many holes you can stuff it into. The less is left, the more it tends to go in the direction I mentioned. For example, I have to think about the fact that a child will soon study, and if that doesn't happen "at home" (in Hotel Mama), you have to pay a lot out of pocket. I have to plan for that scenario as well.