Cash or mortgage?
Question from Sascha updated on 12th February 2013:
We want to buy an investment apartment with a lease until 2022 to Victoria University. We don't know if we should get a mortgage or pay cash? The price is $170,000 and they are on savings account for 4.25%.
Our expert Kris Pedersen responded:
One option to give you the best of both worlds is to take a mortgage out and structure this as a revolving credit facility and then put your cash into it. This way you still have access to the cash however are benefiting from saving the margin between the savings rate and the mortgage rate you will be charged. Note that there may be other considerations such as tax to take into account here so make sure you consult the relevant professionals in regards to this.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz