Sondertilgung — paydown, invest or box?

Year-end bonus or cash on hand? Three plays, one question: pay down the mortgage, invest in ETF, or do both via a box spread.

Cash to deploy EUR

€

Mortgage rate 3.85%

Tune assumptions

Mortgage balance (for allowance check) €400,000

Horizon 10y

Portfolio return 6.5%

Capital-loss offset · box loss ↔ capital gains (savings income, 23%)

With offset on, the box's capital loss nets against Path C's ETF gain at the savings-income rate (23%).

Spread mortgage − box · 0.67%

Box rate (12m EUR) · 3.18%

Offset on — Path C gains +€1,688

A · Paydown

€29,374

Interest saved × 10y: €29,374
Multiplier: ×1.469

B · Invest

€33,508

ETF pretax: €37,543
Tax at exit: −€4,035
Gross gain: €17,543

C · Both via box

€37,229

Mortgage savings: €29,374
ETF after tax: €33,508
Box debt: −€27,341

Comfortable portfolio size for Path C: €80,000 — the box stays at 25% loan-to-value and survives a Covid-style drawdown without a margin call.

How the comparison works

A · Paydown

Bonus goes straight against the mortgage. Residual balance at year N is smaller by bonus × (1+m)^N. Risk-free return at the mortgage rate.

B · Invest

Bonus into ETF, mortgage runs as scheduled. Tax on the gain at horizon. Beats paydown when after-tax portfolio return exceeds the mortgage rate.

C · Both via box

Bonus into ETF, plus box-borrow the same amount against the portfolio and use it for the Sondertilgung. Both effects at once, less the box interest. While mortgage rate > box rate, the spread is risk-free yield.