Using Mortgage Proceeds for Savings Account...

ronaldo

Frequent Poster
Messages
399
I'm currently a first time buyer and have been approved for a mortgage of €100,000 (of which I only need €80,000).

The mortgage is NIB's LTV mortgage and is <50% LTV. Therefore, it has a rate of 4.5%.

Would it make sense for me to take the full €100,000 and put the surplus €20,000 into INBS's Fixed Term Share Account for a year at a rate of 5.1%.

I know I'd have to pay 20% DIRT on the interest but, as I'm a FTB, I'm entitled to TRS on all of the interest on my mortgage. Therefore, I'm really paying 3.6% on my mortgage and receiving 4.08% from INBS - a difference of €96 for the year.

Obviously, if ECB rates rose 0.25%, this €96 would be reduced to €56 and if they rose 0.5%, the €96 would reduce to €16. However, ECB rates are just as likely to drop which would increase the savings.
 

dereko1969

Frequent Poster
Messages
2,740
you're only entitled to TRS on the portion of the mortgage used to purchase, upgrade, repair the house and you have to state that this is true on the TRS application form so your plan isn't viable.
 
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