Hypothetical arithmetic for EUR 100,000 in a deposit, in a rented flat without a loan and with a mortgage, over 5, 10 and 20 years in three scenarios.
Every number in this article is a hypothetical illustration with round figures. None of it is a forecast, a promise or a quote of what any bank or property will deliver. The point is to show the arithmetic, so that you can see which assumptions matter and replace them with your own. Real market figures to keep in mind as a reference: the ECB reported that the average rate on new euro-area household deposits with an agreed maturity was about 2.18% in August 2026 (release of 1 October 2026, as summarised by secondary sources; see the ECB data portal), and Polish portals reported an average deposit rate of about 2.94% in October 2026 with the NBP reference rate at 3.75%. Those are starting points, and rates change.
The set-up
A saver has EUR 100,000 and three options.
Option one is a deposit. Gross interest is 2%, 3% or 4% a year; we assume tax on interest of 20%, so the net rate is 1.6%, 2.4% or 3.2%. Interest is compounded yearly.
Option two is a flat bought without a loan. The EUR 100,000 covers a EUR 95,000 flat and about EUR 5,000 of buying costs. Gross rent is EUR 5,000 a year in the base case. Vacancy, management, service charges, repairs and insurance take 25% of gross rent and income tax takes 10%, so 35% in total and the net income in year one is EUR 3,250. Rent, and with it net income, rises 2% a year. The flat's price rises 2% a year. At the end the flat is sold with 3% selling costs and we assume no tax on the sale (this depends heavily on the country and the holding period). Net rent is kept as cash that earns nothing, which is deliberately conservative for the property.
Option three is the same idea with a mortgage. The EUR 100,000 plus a EUR 110,000 loan buys a EUR 200,000 flat and EUR 10,000 of costs. The loan is interest-only at a fixed 4.5% in the base case, so interest is EUR 4,950 a year. Gross rent is EUR 10,000, costs and tax are 35%, so net rent before interest is EUR 6,500 and EUR 1,550 after interest in year one. At the end the loan is repaid from the sale.
We compare the total value at the end: the sale proceeds (after the loan) plus all accumulated net rent, against the deposit balance.
Base case: worked example for 10 years
Deposit: EUR 100,000 multiplied by 1.024 ten times is about EUR 126,800.
Flat without a loan: net income starts at EUR 3,250 and grows 2% a year, so ten years add up to about EUR 35,600. The price grows from EUR 95,000 to about EUR 115,800; after 3% selling costs that is about EUR 112,300. Total about EUR 147,900.
Flat with a mortgage: net rent before interest adds up to about EUR 71,200 over ten years; interest is EUR 49,500; so net income is about EUR 21,700. The flat sells for about EUR 243,800, minus 3% selling costs gives about EUR 236,500, and after repaying the EUR 110,000 loan about EUR 126,500 remain. Total about EUR 148,200.
In today's money, if inflation averages 2%, EUR 126,800 is worth about EUR 104,000 and EUR 148,000 about EUR 121,000. Both are nominal gains that inflation reduces.
All three scenarios, rounded to thousands
In the optimistic scenario for property: gross rent EUR 5,500 (EUR 10,500 with the loan), costs and tax 35%, rent growth 3%, price growth 4%, mortgage rate 3.5%, deposit net rate 1.6%. After 5, 10 and 20 years, the deposit is about EUR 108,000, 117,000 and 137,000. The unlevered flat gives about EUR 131,000, 177,000 and 298,000. The mortgage flat gives about EUR 143,000, 217,000 and 421,000.
In the base scenario: rent as above, rent and price growth 2%, mortgage rate 4.5%, deposit net rate 2.4%. The deposit gives about EUR 113,000, 127,000 and 161,000. The unlevered flat gives about EUR 119,000, 148,000 and 216,000. The mortgage flat gives about EUR 113,000, 148,000 and 237,000.
In the pessimistic scenario: gross rent EUR 4,000 (EUR 8,000 with the loan), costs and tax 45% because of more vacancy and repairs, rent growth 1%, no price growth, mortgage rate 6%, deposit net rate 3.2%. The deposit gives about EUR 117,000, 137,000 and 188,000. The unlevered flat gives about EUR 103,000, 115,000 and 141,000. The mortgage flat gives about EUR 73,000, 64,000 and 49,000, because rent does not cover interest and the owner tops up the shortfall each year.
What the numbers say about sensitivity
First, the horizon matters. At 5 years, buying costs and selling costs eat a large part of the gain, so the three options are close in the base case, and the deposit wins in the pessimistic case. The longer the period, the more the property assumptions dominate the result.
Second, price growth is the biggest lever. On the EUR 200,000 flat, 3% a year instead of 2% for ten years changes the sale price by about EUR 25,000 before selling costs.
Third, a mortgage multiplies both outcomes. It produced the highest value in the optimistic case and the lowest, below the original savings, in the pessimistic case. One extra percentage point on EUR 110,000 costs EUR 1,100 a year, or EUR 11,000 over ten years.
Fourth, costs and vacancy decide the rent. Moving from 35% to 45% costs on EUR 5,000 of rent removes EUR 500 a year.
When a deposit is the better choice
A deposit is the better place when money is needed within a few years, when you cannot tolerate a result below the original sum, when buying and selling costs are high relative to expected growth, when mortgage rates are high, when the local rental market is weak, or when you cannot afford a concentrated and illiquid asset. A deposit is also simple to hold and, within the limits of deposit guarantee schemes, protected up to a stated amount per bank; check the limit that applies to your bank.
Property can have non-financial benefits that the arithmetic leaves out, such as personal use or avoided rent, and costs it also leaves out, such as time, management and stress. You can test your own numbers in the calculators, and see total cost of ownership abroad and mortgages for non-residents for more on the cost side. For market data see Eurostat house price statistics.
FAQ
Are these results a forecast? No. They are hypothetical scenarios with assumed rates; real prices, rents, rates and taxes will differ.
Why is net rent not reinvested? To keep the arithmetic readable and conservative for the property. If it were saved at the deposit rate, the property total would be somewhat higher.
Why does the mortgage case look so extreme? Because borrowing magnifies results in both directions. A small change in rent, price or interest rate moves a large amount against a fixed loan.
Do taxes on the sale matter? Yes. We assumed none on the sale. In reality capital gains tax can apply depending on the country and how long you hold the property, and it would reduce the property totals.
Which assumptions should I change first? Price growth, vacancy and costs, interest rate on the loan and your own tax rate.
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