int earn vs int paid

[paddyodoors]

Hi

I have what is probably a very basic question but hopefully soemone can just carify

If I have my mortgage at 4.88% and can get a fixed 1yr deposit of 6.5% (investec). I currently have some excess cash to draw down re a future planned extension.

Even after dirt I belive that I am marginally better off putting the funds on deposit, rather than waiting to draw the cheque until required which is likely to be in excess of 1 year.

my calc = 300,000 @ 6.5% = 19,500 Dirt 4,680 Net 14,820 versus 300,000 @ 4.88% = 14,640
Am I missing something?

thanks
Paddy

 

[ClubMan]

Won't 2009 DIRT be 23% which would mean €19,500 gross is €15,015 net?

 

[Lightning]

Am I missing something?

Yes ...
1)You need to guesstimate what you mortgage rate will be for the next 12 months rather/as well as using a current rate. Some Economists say the ECB will cut rates by up to 1.5% next year.
2) You need to take into account any income tax losses you will incur by paying less on your mortgage.

Both point towards taking the Investec fixed rate.