Borrowing to build: Does it make sense to overborrow for contingency and invest it?

D

declan conno

Guest
If you were borrowing to build and allowed for an extra say 25 k to cover oversights would it make sense to invest with Rabo or similiar at 3% considering you wouldbe borrowing at 3.1 % tracker.
Do these two balance out ie what you make on savings would cover intrest on borrowings(in the short time only)?
 
Re: Balancing the books

You will pay DIRT on the savings interest received, whether or not you will get tax relief on this last portion of the mortgage interest probably depends on whether your mortgage interest is more than the ceiling for the relief.

Do you have to draw down the extra 25K straight away, can you not be approved and draw it down if and when needed?
 
doesnt really make sense to draw down, and pay interest at 3.1% , whilst availing of savings of 3% - DIRT. as suggested only draw down when required, that way your not paying interest on it.
 
Molly

So i can assume that i only pay interest on amount drawn down to date and not on total approved.
 
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