Interest only re mortgage

H

Haille

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I am trying to decide which mortgage route I should go for an investment property.For capital and interest route on my investment property the best rate I can get is 4.94%.If I re mortgage I can get 4.25%.If I go down the interest only route at the 4.25%I will have to take out life cover.The amount I am borrowing is 100,000 over 15 years.Given the 6%+ savings rates offered by some financial institutions for regular savings accounts.Is the following a viable option.Take out the interest only re mortgage+life cover minimal,deposit rental income [amount not sure] in a regular savings account in the hope of having 100,000 in account after 15 years to re pay capital.I would be getting interest on sums in regular savings account+lifecover.Does this have advantages over the capital/interest repayment option
 
You'd have to cost the life cover, and calculate cost of borrowing by either method. The high returns on regular savings products are limited duration too, and you shouldn't factor in deposit rates above mortgage rates for any longer than the limited guaranteed time. I'm afraid there's no alternative here to setting out all your assumptions and running the numbers.
 
Dreamerb said:
You'd have to cost the life cover,
Click to expand...
Mortgage protection life assurance is not mandatory for investment mortgages unlike for owner occupied PPR mortgages (other than where exceptional waivers apply). However some lenders may still insist on it in spite of this.
 
Reference to life cover was in relation specifically to securing the mortgage via a re-mortgage of the PPR, where I assumed the requirement for life cover would apply. So my suggestion, in effect, was that the OP not confine him or her self to looking at the rates, but should also take into account that an interest-only 4.25% (not that I think they'd get that, secured on a PPR, by the way) might not look so much more attractive than an interest-only 4.94% once the cost of life cover requirements for the 4.25% option are added on...

I trust this stream-of-consciousness explanation muddies the waters sufficiently.
 
Many thanks for your replies Dreamerb and Clubman.When I worked out the repayments on the capital/interest route V the re mortgage route there was a difference of 10000 euro over the lifetime of the mortgage.When one deducts the cost of life cover there is still savings,plus you have the added benefit of life cover.The only problem is having the capital at the end of the mortgage. Still undecided.I hope to get exact lifecover quotes shortly.Thanks again
 
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