Mortgage

Not always. More down means a smaller loan, less total interest and no mortgage insurance. But there is an opportunity cost: sinking every saving into the deposit wipes out your emergency buffer. If you have investments that reliably beat the mortgage rate after tax, or you need cash for risk, a smaller deposit can be the better call. Keep three to six months of living costs aside regardless.

A fixed rate never changes, so the payment is predictable, which suits anyone planning to stay put and valuing certainty. A variable rate usually starts lower but moves with the market and can rise, which suits someone who plans to move or refinance within a few years and can absorb higher payments. The deciding questions are how long you will stay and whether your cash flow survives a rate rise.

Compare the mortgage rate with your alternative after-tax return. If the rate is higher, prepaying locks in a risk-free return at that rate. If not, your money may do better invested, or simply held as an emergency fund. In some countries mortgage interest is tax deductible, so prepaying also gives up that benefit, which belongs in the calculation.

A rule of thumb for debt capacity: housing costs should not exceed 28% of monthly income, and all debt payments combined, mortgage plus car loan plus minimum credit card payments, should not exceed 36%. Lenders use it as a first screen and it is deliberately conservative; final approval also weighs credit score, down payment and job stability.