Pay for property with cash or take out mortgage

Status
Not open for further replies.
N

newseeker1

Registered User
Messages
206
I have received inheritance - tax liability sorted
I intend to use the money to buy a property. I would be 1st time buyer on my own

Which is smarter thing to do

A. Use the money from the inheritance to pay for the property in case and own it outright without having a mortgage and lodge the money would have paid monthly as mortgage to some of those high interest regular saver a/c's
or
B. Take out some level of mortgage 100-150k to avail of mortgage interest relief. What would be mortgage interest relief on mortage amount of 100-150k per month on variable mortgage

Thoughts/Advise?
Thanks
 
Re: Pay for property with case or take out mortgage

Mortgage interest relief is only available on 20% of the amount of interest you actually pay. So in other words, you'll still pay the other 80% of the interest bill.

Personally, I'd be inclined to buy the house with the cash and invest the equivalent of your mortgage repayments.
 
Re: Pay for property with case or take out mortgage

Do you still have a lump sum as a rainy day fund, or in case you decide to take a year out etc. ?
 
Re: Pay for property with case or take out mortgage

A lump sum placed in Rabo would make more over a year than small sums saved every month, as an example.

In my view you are better taking a balanced mortgage you can afford but doesnt stretch you and using the remaining money to invest.

Thats what we have done after a house sale. We bought a nice apartment with low mortgage and have the rest to play with.

Currently making enough in interest each to pay off the annual interest on our mortgage and then some.
 
Re: Pay for property with case or take out mortgage

You should: (a) put three month’s salary equivalent away in a high interest account as your ‘rainy day’ fund’ – one month’s if you have a public sector or otherwise secure job; (b) make pension contributions up to your max tax allowance for your age; (c) blow 5% max of the inheritance on yourself – you’re only young once; and (d) put the rest towards a property. If you don’t have enough to buy the property outright take out a small mortgage – then invest in the stock market when the mortgage is paid off. If you can buy the property without the mortgage do this and invest what would be your mortgage repayments, either directly or via your pension to avail of tax allowances.
 
Re: Pay for property with case or take out mortgage

Alternatively, rent your accommodation and invest/spend the money as you wish. Is property such a good investment?
 
Re: Pay for property with case or take out mortgage

Pretty solid advice from PMU, IMHO.
 
Re: Pay for property with case or take out mortgage

Assuming you are going to buy the property anyway as a home there is a lot of merit in paying for as much of it up front as you can, and investing a certain sum each month as opposed to paying interest to a bank via mortgage repayments. If you do decide to place a large sum on deposit make sure you get a good interest rate from your bank, and that this rate is above the rate of inflation. Otherwise the value of your money on deposit will be effectively erroding as it will be worth less in real terms when you cash it out.
 
Re: Pay for property with case or take out mortgage

If it is agreed that property prices are falling then you would be mad to buy property right now. Why not wait about 6 months and see if prices stop falling
 
there are so many freaked out sellers now it is a major buyers market.........and you recommend deferring 6 months while the op could be firing low ball offers to his heart's content until any potential ecb cut which could easily change the market dynamic??
 
Status
Not open for further replies.
Back
Top