Lower Mortgage Vs Investing Savings

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I am currently in a position where I have some money to put aside for some medium-term equity investment (~ €10k)

I do not however own my own property and am currently thinking I'll be buying a property in around one years time.

I'm trying to understand if from a financial point of view I would be best off:
(a) keeping my money for one year in a pretty liquid account where I have access to it and can then use to reduce my mortgage requirement when purchasing or...
(b) Investing in the hope of getting superior returns and in maybe 5-7 years time using the matured investment as a lump sum payment of my outstanding capital on my mortgage.

I have queried with a few banks and am getting responses telling me this is a personal choice. Can someone help me understand what option is better from a financial viewpoint. :confused:

Thanks
 
If you are buying a house soon then you will need money for a deposit (unless you get a 100% mortgage), the legal/conveyancing and related expenses and then for fitting out/furnishing the house. As such I suspect that you might be better off putting the money on deposit and worrying about longer term savings/investments when you get all that sorted first. Don't expect indepdent, professional savings/investment advice from tied agents at the bank.
 
This recent thread may be of some interest.

It really comes down to your attitude to risk.

With regard to returns, unless you are getting guranateed returns from an investment, no-one can say for sure whether you are better off with cash or equities over a 5-7 term.
 
I have around $18k put aside in other accounts that I have access to that I intend to use as part of a deposit and the other costs that Clubman mentions above. I can afford to put aside the €10k and not use it as part of purchasing my house, I'm just not sure if this is the best option.

Assuming putting aside my money earns a return in excess of my mortgage rate (I consider myself tolerant of the risks associated with fund ownership) would investing now & paying off the mortgage capital later be a more financially rewarding option? Or am I completely confusing things by comparing two options with different lengths to maturity? Thanks
 
What you could do is this:

Check out the mortgage calculator at www.jeacle.ie and play around with the numbers.

Estimate a growth rate from a fund that you like over a 5-7 year period and compare the two results-the growth rate will only be an estimate-but be as realistic and objective as possible-it is probable that your guess is as good as anyone else.

Bear in mind that you are entitled to the highest rate of tax relief at source on your mortgage interest (currently €8,000 @ 20% for a single person) for the first 7 years.

It is all a matter of opinion as to which is best-no-one has a crystal ball.

The alternative is to lock up your money for the period to earn a guaranteed return in excess of the mortgage interest-if available.
 
I used present values with a few different scenarios to see what option seemed best with the help of the online calculator. From what I've calculated annual returns would need to be very good (achievable but not probably realistic) for the preference to be putting money aside into an investment. It seems the best financial decision would be to keep the money in the best earning demand account I can find and use to reduce my mortgage requirement.

Thanks for the help on this one.
 
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