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Cake day: July 12th, 2023

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  • Ritsu@lemmynsfw.comtomemes@lemmy.worldSpare a dollar?
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    1 year ago

    Liquidity Risk: Paying in full ties up a large amount of capital in one asset, reducing financial flexibility and liquidity.

    Opportunity Cost: The capital used for a lump sum payment could potentially yield higher returns if invested elsewhere. Although, at current rates that is probably unlikely.

    Leverage: Mortgages allow for leverage, where you can control a large asset with a smaller initial investment.

    Interest Rates: With historically low interest rates, financing can be more cost-effective than using cash. This is currently not true.

    Diversification: Investing the money in a diversified portfolio can reduce risk compared to putting it all in a single property. See Leverage.

    Tax Benefits: Mortgage interest payments can often be tax-deductible, which is not applicable when buying outright.