Mortgage or Cash

I have a question...What is best

To buy a property with cash....or keep the cash...invest it and get a mortgage for the property

Why ask, well, I know in some countries, with the tax benefits that it is better to keep your dosh and take a mortgage. In spain it appears that it is better to keep the cash as you can wrap this offshore in a bond for X years and gain compund interest and keep it going. If you take out a mortagage you get all sorts of ta benefits and would end up nearly paying zero tax on income (If income is kept quite low

I'm going to get some advice etc but I would be interested if any of the boffs (experts) in this forum have any ideas

Also...anyone got any ideas why even though I have checked the box

" Notify me by email when someone replies to this thread"
it doesn't do it...using gmail

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Hi pknott,

The member that will give you expert advice on this poser, is Smiley.

i know he is away in Italy at the moment, (Still there I think?!), but if you send him a PM he will give you a mail I'm sure.

Good luck though!

Kind Regards,

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pknot, we were originally advised that it is best to take out a mortgage in Spain because of inheretance tax issues.  I am sure there are other reasons too.

By the way, you may want to check your spam folder for the notification emails.  Make sure you class them as "not spam".

Justin

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Hi chaps

Thanks for that....

Found the culprit in my spam....doh...

yours

PK

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HI Pknott - guess really its up to you and whether your cash can work better for you elsewhere - certainly there are tax benefits from the point of view of succession (inheritance) tax, wealth tax and also income tax if you become resident as long as you are declaring income here there is still a level of tax relief on mortgage interest.

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Long time response I know...but I was thinking...getting into the spanish way of life :0)

In relation to Income ... does investment income count...I know that its taxed at 18% (slighly lower than normal paid income) for the purposes of tax relief?

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Yo0ure better to confer with a gestor but income is income

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I am about to take over the builders mortgage (over 20 years, we are both 60) because I thought it was the cheapest option. Euribor +1.1% (at least it was that when I enquired a few weeks ago!) The redemption penalty is 1% of the outstanding balance. I'm not sure at this stage if we need to take a compulsory product but I shall be ringing the Cam bank tomorrow to find out. We could possibly raise the cash when we sell our Uk property but we're staying in Uk and may need that cash for another property. Also, I too had heard that it's beneficial to have a Spanish mortgage for inheritance tax reasons. We have to complete week beginning 10th March for Polaris Hacienda Riquelme. We have not returned the paperwork yet. Are we cutting it a bit fine? Also, any further advice re builders mortgage? I have listened to Justins video and also read some of Patrick's info but my brain started to hurt!! (Only because I find it hard to retain information.....)

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If you take over the developers mortgage (and if you are both aged 60 I doubt they will give you the 20 years but stranger things have happened) it will be cheaper in the way of start up costs - the developer should have paid Notary  fees and the mortgage  tax. The downside is that developer mortgages are less flexible in what you can and cant do - such as interest only, overpayment etc - basically you are subrogating (transferring) the developers terms so the question is whether it fits your requirements - if it does best advice from me to you is to take it as the upfront cost should have been paid - if it doesnt then you should look elsewhere. Subject to status you can get rates as low as Euribor plus 0.75% - be careful of compulsory products - long term interest only - guess there are all sorts of things to consider but whatever you do make sure that the mortgage you take for completion is one that suits you for the long term as well - remortgage here is not only complex but bloody costly so best to get it right from day 1. Hope that helps.

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Thanks very much Smiley. Believe it or not, we were offered 20 years when we asked for 25!!

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