But an investment with cash or with a mortgage?

corcoran1

Registered User
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I'm buying an apartment as an investment. I have the full asking price in savings. Is it more sensible to pay in full with my savings or to take out a partial mortgage. I would have assumed the first but a few people have said to partially mortgage due to being able to offset a lot of costs against the interest on the loan etc etc. I don't fully understand.
 
If you took a mortgage for €100,000 @ 4.5% you would pay interest of €4,500 in the first year and you would be allowed to set €3,375 against the income from the property therefore saving about €1,850 from your tax bill (assuming you pay at the higher rate), so the cost to you of the mortgage will be €2,650.

If you are therefore leaving €100,000 on deposit at 2% you will get €1,180 after dirt.

I don't think it makes sense to spent €2,650 to gain €1,180.

It might make sense if you had something better to do with the money than leave it on deposit or if you were likely to need to borrow at a higher rate than the mortgage for something else (eg car loan).
 
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