Mortgage Interest relief or straight cash deal - best option?

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Nuala1974

Guest
Can anyone advise me if its better to buy a property outright or to get a mortgage and get the interest relief?? Which makes most sense in terms of money savings? :confused:
 
It would be residential Compalier - I will be living in it myself in the short / medium term - i.e. 2-5 years.
I can come up with the cash with a lot of family help, scraping and big changes to my lifestyle, but if it makes sense to go down the route of getting a mortgage over a short term - i.e. to take advantage of the interest relief then obviously I would consider this as an option.
Im a total nubie in relation to all this sort of stuff and this is likley to be my one and only opportunity to own my own property so I am keen to do the best deal possible. Im not good when it comes to figures and financial lingo so if you can explain your opinions and thoughts in simple terms that would be really great. Thanks a million, Nuala
 
Complainer said:
Yep - it's still there - 75% of all interest paid - it's a great scam all-together.
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Oh - that's where 75% of the interest can be deducted from any rental profit when working out income tax. I am sure the OP is on about the owner occupier mortgage interest relief.

To the OP - it's not just a matter of the tax relief that you need to consider.
If you can invest the cash and get a bigger annual return after DIRT than the mortgage repayments after tax relief - then getting a mortgage is the best option. (If you can get one !)
But with the lowest 5 year fixed rate mortgage rate available at 3.7% ( PTSB borrowing 50% of the value) and the best 5 year fixed deposit rate at 4.56% (Also PTSB) which is about 3.2% after DIRT - it looks like paying cash is the best option.
If it is only short term - why not rent?


www.*****************.com
 
Thanks Irishlinks - not sure if I understood all that, as I said I am green - it would seem very green indeed!
So why not rent? Well I have been doing that for a long time and like most Irish people I would ideally like to own my own property, plus I think its an excellent price and opportunity so it could be a good longterm investment for me. I will probably go the cash route and try and make that work, but I suppose I have to consider all options - even if not in any great detail.....:}
 
Just so you know the kind of figures invoved in mortgage interest relief - they are not maybe as massive as you think?
For example - on a 100,000 mortgage at 4% over 25 years - the total relief in year one would be about €970 . (first time buyer)
It's not an insignificant amount though - so if you were definitely buying with a mortgage you need to do it before the relief is abolished in 2013.
 
Thanks Irishlinks - much appreciated - to buy with cash would mean the bankers miss out a little and that has to be a good thing - plus I wouldnt be shaking everytime thers is a hike or drama. Cash it is I think! scary but time to take that leap me thinks! Cheers, Nuala
 
Nuala1974 said:
I can come up with the cash with a lot of family help, scraping and big changes to my lifestyle, but if it makes sense to go down the route of getting a mortgage over a short term - i.e. to take advantage of the interest relief then obviously I would consider this as an option.
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You don't 'take advantage' of the relief. The relief just lessens the interest paid. If you avoid paying the interest all together, then you are better off.

Having said that, from the outline details given, you are probably better off taking out a small mortgage, so you have some funds available to furnish and decorate the house.
 
irishlinks said:
Is there interest relief on buy-to-let properties - I don't think so?
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Why the hostility toward Complainer? He asked a reasonable and logic question.

Complainer said:
Yep - it's still there - 75% of all interest paid - it's a great scam all-together.
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Businesses pay tax on profit. Therefore doing so in a property business should be no different but it is; it is the only business where tax is paid on turnover. Landlords are being screwed because of political based on populist ignorance.
 
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