80% deposit in cash, but what to do with it

Musicol

It's a lovely 'problem' to have, I guess, but I'd like advice on how best to use a large cash sum (currently in ISAs and a PIP) which my partner and I would like to use towards buying a house. We wish to buy our first property for around £90,000, and we already have approx £70,000 in savings. We are both in our mid to late 40s, so don't want more than a 15 year mortgage. So here's the burning question - do we take out a £20,000 mortgage and give all our savings as a deposit; or do we take out a large mortgage and keep investing our savings to pay off the mortgage?
We are completely debt-free and are very careful with our money, so we would not be too happy about taking a big risk. Even though we have done very well with the PIP investment over the last few years, we don't want to push our luck with it. Advice and options would be greatly appreciated.
Thanks, Musicol

skippy64

I think I have read on here (could be wrong) that most mortgages offered start at approx £25,000. I think its great that you have created for yourself an 'enviable' position to be in with the amount of savings that you have available. I personally if in your position wouldn't use all of your savings if you do intend to go for a mortgage so that you will always have a good 'comfort zone' of funds easily available for all the unexpected bills/expenses that modern life seems to chuck at us all these days !! Best of luck :j

peterg1965

Not necessairly so, several lenders will give mortgages of less than 25K I suspect 15K is the absolute minimum. I would genuinely say that in your position you need to seek professional advice from an IFA. My view is that you should minimise your mortgage by putting as much of a deposit down as possible, but leave yourself with a financial cushion for emergencies/any house repairs that need doing and also the cost of moving (about £1000 i would guess).

skippy64

What may be of interest to all us MSE readers is how long it took you to get to your £70K savings. Any tips, where monies have been saved by old style money saving techniques etc would be appreciated. Out of interest are you currently renting a property, if so whatever you are paying there may be comparable to a new mortgage or possibly even more than that of a new mortgage so you could even have more monies available by purchasing and putting any released 'cashflow' back into savings or overpaying on the mortgage. Just a thought anyway so excuse my ramblings

skippy64

I have just re-read your original post, is the house purchase for you or is it to be as a 'Buy-to-Let' investment ?

Musicol

In our case there have been no magic wands been waved - no lottery wins, no inheritance and no bank raids! Apart from not smoking, not eating out and not having any major holidays in the 8 years we've been together, we've also avoided any borrowing (therefore not paying any interest to anyone). Don't be sorry that we've been missing out on life - we have plenty of fun, thank you! But that's in another chatroom elsewhere.
My partner pays all bills as soon as they hit the doormat, therefore we know exactly where we stand. We each put in at least £250 to an investment ISA every month, and try to top up other ISAs as and when we can. We live (rented accommodation) and work around the London area, but wish to relocate to the Northwest. We are intending for our mortgage to be considerably less than our current rent - over £500 per month.
Working hard and saving harder is our only 'secret'.

skippy64

Musicol wrote:

We live (rented accommodation) and work around the London area, but wish to relocate to the Northwest. We are intending for our mortgage to be considerably less than our current rent - over £500 per month.
Working hard and saving harder is our only 'secret'.

All I can say is well done on what you have acheived and a good choice of intended relocation to the North West, but I'm biased that way living in Lancashire. By the way don't forget you'll need your passport when moving 'oop North!!' :rotfl: Its a 'are you local?' requirement!!!

Gem_

There doesnt seem to be a minimum - I borrowed £9,000 a couple of years ago from the Halifax, they kept gettting very confused that it was a mortgage not a car loan!

You could always get an offset mortgage like the Natwest one, they you could put the money in the offset account so you would not be charged interest the equivalant mortgage balance but you would still have the cash easily available if you wanted it for any reason.

Congratulations for being in such a "difficult" situation ...

G

nomoneytoday

Why not see if you could get a 0% credit card lol

brranger

I like the Idea of the offset option to ie: put down a 10% deposit to avoid ltv charges mortgage the rest and offset you are repaying the intrest on the same amount of borrowing overall but as stated you still have your saving if you need them or when you do pay of your mortgage they will still be there to retire on :T

Good luck