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Building work: take 3% loan out or pay from savings
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Bartoni79
Posts: 143 Forumite
Hi,
Just looking for some advice/ thoughts. Im going to have some building work done... For arguments sake, lets say its going to cost 100k. My bank has offered to give me a fixed stand alone mortgage loan for about 3% for the next 5 yrs, then i need to remortage etc, but could liquidate some investments.
My question is...Is it
a) better to pay 100k from my savings. The disadvantage is that I don't have that money as a back up anymore OR
b) Get this mortgage for 100k, then put the 100k money into say dividend ETF investments and hope the investment yield is greater than the 3% (after tax) at the end of 5 years. At the end of the 5 years if rates have gone crazy, I could pay back and take the difference between the 3% and the yield i get as profit or remortage and continue the strategy.
Are there additional considerations / factors I need to make?
Any thoughts would be welcomed
Just looking for some advice/ thoughts. Im going to have some building work done... For arguments sake, lets say its going to cost 100k. My bank has offered to give me a fixed stand alone mortgage loan for about 3% for the next 5 yrs, then i need to remortage etc, but could liquidate some investments.
My question is...Is it
a) better to pay 100k from my savings. The disadvantage is that I don't have that money as a back up anymore OR
b) Get this mortgage for 100k, then put the 100k money into say dividend ETF investments and hope the investment yield is greater than the 3% (after tax) at the end of 5 years. At the end of the 5 years if rates have gone crazy, I could pay back and take the difference between the 3% and the yield i get as profit or remortage and continue the strategy.
Are there additional considerations / factors I need to make?
Any thoughts would be welcomed
0
Comments
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couldn't add anything without more info on your income, outgoings etc.
If you have a good well paid job (more than £60k) then the financial games above are possible.0 -
Thank you!0
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