Would you take this mortgage offer and invest the fund (250K 5 year-fixed rate 1.54%)

IamWood

[ I post the same post on the Saving and Investment forum. I post here for more wisdom ]

Dear all,

I recently remortgaged (250K, 5-year fixed term with an interest rate of 1.54%) my current house (which I own outright) in the hope of buying another flat for work. The purchase is on hold but my mortgage is still on offer: 

With inflation so high and the interest rate catching up. Would you consider taking the funds and invest them (for example putting them in a higher-rate savings account).

My thoughts on this:

The advantage of taking the mortgage:

1. The door is still open for me to look for another property if I want to for 5 years, with such a low rate.

2. Putting the fund in a savings account seems to be able to earn free money (quite a few thousand in 5 years?) by arbitraging the interest difference.

3. I checked with the mortgage adviser who said I could save the fund and make the purchase later, which is still my plan although it's not definite.

4. Potentially I can pay for my son's university fees without a student loan (sensible or not, that's another debate).

The downside of taking out a mortgage:

1. Unnecessary hassle. Life is too short and too complicated

2. Investing is risky but can be limited with savings accounts, which is my intention for now.

3. No longer debt-free.

Do I sound reasonable?

Thank you!

ACG

Would the lender still release the money for investment purposes? I dont know many who would. 

Bigphil1474

Sounds like a lot of hassle managing the fund - would need to be split for any protection? Personally, I would look to purchase asap or not bother, but if you are well organised and happy to do the work, might be worth it. Bear in mind the mortgage repayments - presumably you can afford to pay them without touching the main fund?

IamWood

Bigphil1474 said:

Sounds like a lot of hassle managing the fund - would need to be split for any protection? Personally, I would look to purchase asap or not bother, but if you are well organised and happy to do the work, might be worth it. Bear in mind the mortgage repayments - presumably you can afford to pay them without touching the main fund?

I should be able to make the payment if I'm still in employment. Yes, it does sound like a lot of hassle. Will see what comes out tomorrow for the new interest rate. Thanks