Curious to see what people prefer out of the following two scenarios:

Scenario 1:$1,000,000 mortgage amortized over 25 years with 5 year term at 2.00% interest rate Monthly Payment is $4,234 and total cost after interest over the amortization period is $1,270,353

Scenario 2:$728,000 mortgage amortized over 25 years with 5 year term at 5.00% interest rate Monthly Payment is $4,234 and total cost after interest over the amortization period is $1,270,225

Assuming no prepayments, you will pay the same amount after 25 years under both scenarios. The only difference is you will need a larger down payment for scenario 1.

Personally, I would much rather have scenario 2 as I would pre-pay my mortgage as much as possible. However, I know people who would rather pick scenario 1 and use their excess savings to invest in the markets or other forms of investments given cost of borrowing is only 2.00%.

Also, in scenario 1, once you pay the high price you are on the hook for it. Interest rates may go up which causes financial hardship. Scenario 2 has lower prices to begin with and there is a chance interest rates will go down which would be advantageous to you.

Which one are you?