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Mortgage or straight Payment???

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  • 25-11-2004 4:40pm
    #1
    Flinty
    Closed Accounts Posts: 228 ✭✭


    Hello all,

    Could I be as bold as to ask a hypethical question??

    If I had, say, €1m in a bank account and wanted to buy a house for €400,000... would I be better off paying for the house outright or getting a mortgage and paying for it that way, thereby keeping the lump sum in the bank???


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    #2
    Horeb
    Closed Accounts Posts: 314 ✭✭Horeb


    Well I would think Straight, why, because you invest say 400K today.

    Yes you are short it, but in one year you could be up 40K


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    #3
    kenmc
    Registered Users Posts: 7,276 ✭✭✭kenmc


    there's probably a line somewhere, where you're better off paying X of it yourself and a mortgage for the rest, due to the tax relief you get on the mortgage interest.... probably....


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    #4
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    The answer depends on what you are going to do with the money if you don't use it to pay off the mortgage. If you can invest it and make say 8% when the mortgage rate is <4%, then you are better off paying the 4% interest on the mortgage while earning 8% interest on the investment. You'll find it difficult to get any investment which will give a guaranteed return that beats the mortgage rate (because if such a thing did exist, everyone with half a brain would stop paying their mortgage and start investing instead).


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