Twelve days before the Extraordinary Christmas Draw, many fantasize about what they would do if they got the ‘Big Jack’. In a country like Spain, conservative financially and in which housing continues to be a main investment – despite everything -, in most cases those who play lottery hope to be able to pay off the mortgage if they win a substantial prize. If that is not done, the other option is simply to put the money in a deposit.
But, of course, the falls in interest rates have made the remuneration of the most conservative savings products begin to lose attractiveness, something that is already noticeable in fixed-term deposits. According to comparator data Kelisto.esthe interest applied to these products has fallen on average by 12% in the last year.
However, they explain from Kelisto.es, it is still possible to find some proposals with which you can achieve a higher return than the savings that would be obtained by settling a mortgage. From this comparator they have done the calculations, and their conclusion is that Using a jackpot to pay the mortgage does not pay off unless we are paying interest greater than 5%, something that could only happen in specific circumstances, when the Euribor was at maximum levels.
There is something worse than the fact that you don’t win any prize in the Christmas Lottery draw, and that is that you win, but you can’t collect it. This is precisely what has happened to the Elena and Lorena de Combarro hair salon, which is now located… https://t.co/hCNkIU0OFD
— Christmas Lottery (@loterianavidad_) December 26, 2023
From Kelisto.es they offer us an example. If we take the 72,000 euros that, on average, Spaniards owe for their mortgages, and invest them for ten years (which is the term of the most profitable deposit today: that of Banca Sistema, with a TIN of 3.4 %), the remuneration that would be obtained would be higher than what we would save in interest by settling the debt we have with the bank.
In very crude terms, the savings that could be achieved by paying off the mortgage ranges between 580 and 18,150 euros depending on the interest on each loan, while, invested in a fixed term, that money could produce profits of 19,600 euros.
The importance of doing the math
Despite all this, if “we win a Christmas lottery prize, it is important that we crunch the numbers and take into account factors such as the amount we have won, the interest on the outstanding debt (if it is a personal loan, it is possible that paying off could be of interest, given that the interest paid is higher), the pending repayment period (the longer it is, the more we will be interested in repaying) and our profile as a saver/investor, since this also will depend on performance that I can achieve,” explains Kelisto.es spokesperson, Estefanía González.
On the other hand, if the prize obtained is less than 20,000 euroswhich is the minimum amount that the most profitable deposits on the market require to invest, Kelisto.es warns that paying off the mortgage would be interesting for those who are paying an interest equal to or greater than 3%. If the interest is lower, again the most interesting option is a deposit.
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