Cash or Equity deposit

xleannex19

Hi there,

My partner and I are currently trying to save a deposit to buy a house in the next year or so. At the moment we are putting all our monthly savings into our current mortgage to try and bring down the interest and reduce the balance as much/quickly as possible. To point out – we also have a safety fund for any cash emergencies.

My partner will be receiving a large chunk of money in the next few months so we were wondering should we put this money directly into the mortgage or should we put it in a savings account so that we have both the equity from our current mortgage and cash savings to put against a house deposit? Also, can equity only be used as a deposit or is it essential to have cash savings too?

Thanks in advance for any responses.

Thrugelmir

If the mortgage is at a higher rate of interest than you can achieve on your savings , then overpay the mortgage.

You may be required to find up to a 10% deposit on the new property when you exchange contracts. This can be funded in part by the deposit your solicitor receives on the sale of your existing property. So will be worth having the difference available should it be required.

dimbo61

" Large chunk of money"
Maybe do both and pay some off the mortgage ( if on a higher rate than savings) and put the rest into Cash Isa,s or regular savers.
If you hope to pay say £250K for your next home then keep £25/30K in savings and pay the rest off the mortgage ( Again if NO ERC,s )

Foxy-Stoat_3

xleannex19 wrote: »

Hi there,

My partner and I are currently trying to save a deposit to buy a house in the next year or so. At the moment we are putting all our monthly savings into our current mortgage to try and bring down the interest and reduce the balance as much/quickly as possible. To point out – we also have a safety fund for any cash emergencies.

My partner will be receiving a large chunk of money in the next few months so we were wondering should we put this money directly into the mortgage or should we put it in a savings account so that we have both the equity from our current mortgage and cash savings to put against a house deposit? Also, can equity only be used as a deposit or is it essential to have cash savings too?

Thanks in advance for any responses.

Are you looking to buy a second property or selling your current house and buying a dearer one?

You shouldn't need a deposit as your equity will be your deposit, unless your looking at a second property, so as long as your current mortgage doesn't charge you for big over-payments then pay a chunk of the current mortgage.

xleannex19

Thanks for all the responses.

We will be selling our current property and buying a dearer one.

We are currently overpaying hugely on our mortgage anyways and there is no charge for this so we have been making the most of it. We are just worried that having all our savings tied up in the mortgage could cause problems if we need a cash deposit also