Seems like a flowing rate mortgage would be considerably less profitable once we have positive real interest rates again. Why are you choosing a flowing rate mortgage over a fixed rate one to better take advantage of the current negative real interest rates? Sure the short term payoff is greater but long term seems limited.
I could fix for 7 years at 4.3% APR but that much thinner margins (although more predicatable). A 2 year fix is still 3.8%.
One big reason not to fix the rate is that this may well not be my forever house. I believe I will want to return home, quite probably in the next few years (possibly as little as 2) and if when I do I well need / want the capital. Early repayment charges will make it painful if I've fixed.
Scale is a significant factor, especially in relation to your income. ...
By worst case scenario,... Can you still come out OK on this, or did you just make yourself bankrupt or in a foreclosure scenario?
My current mortgage (12 years left of 15) is about 20% of my take home. My current savings is about 50% so I could pay off 75% of salary to mortgage in an emergency which would crush it in a couple years so a market downturn wouldn't be the end of the world.
I am unlikely to lose my job, the owners (private company) are very loyal to staff (a couple years ago we lost 40% of our business and got sued by the DOJ and they didn't lay anyone off).
That said, if I lost my job I'd sell the house. The only reason I live where I do is for work and it is unlikely any other job in my industry would be in the same country.
These are the things leading me to consider the aggressive approach. At the same time, leverage is a two edged sword.
It gets more complex though - I have an opportunity to rent the house to a colleague and work part time and remote for the next 12 months (or more). In some ways this increases volatility (as my income will drop and expenses rise) but the rent will cover the mortgage so that's safer in a way as I then have rent, main side hustle, and hopefully a couple small passive streams. It's also pretty much why I am working towards FI (since I enjoy about 20 hours a week of work), so since I have sort of reached the finish line, why risk stepping on a banana skin?