Buying house outright vs mortgage

peterwalker1984

Currently in the process of buying a 3 bed terrace, not a very expensive one. I was going for a 60% LTV mortgage over 20 years as I have savings to put down as a large deposit, have had this approved.

Through family I would actually have enough savings to buy the house outright, with money left over for repair work, still leaving me with some savings but not as much.

Given the chance would you buy outright and then build savings back up rather than waste money repaying a loan over a long period?

good_advice

Hiya, if i could I would buy the house out right if It was my main and only home = one i was going to live in.
However, I would only buy if I was spending my own money. I def. would not be borrowing money from family.

00ec25

as he says above - buy it outright if you can do so without exposing yourself to being in debt to family members - you never know what could happen that would prevent you repaying them and having money troubles between family members is a recipe for disaster

geoffky

No brainer..Mortgage free

phill99

Over 20 years a £60k mortgage will cost you £90k.

To save yourself £30k, buy it outright!

Marine_life

phill99 wrote: »

Over 20 years a £60k mortgage will cost you £90k.

To save yourself £30k, buy it outright!

But.

If you can get a mortage at 2% and invest at 4% why wouldn't you do that?

SG27

You'd be throwing money away by getting a mortgage.

unless! You can get a guaranteed return at a higher rate than the mortgage on the mortgage amount by placing the savings somewhere else over 20 years.

gordonbennet

While rates are still so low it's worth borrowing and investing the spare cash in something else - but only if the rates net of tax leave you better off. How about a second property to let out and give you an income?

That said, there is a lot to be said for owning your house outright - if the chips are down at least you have your home. Don't borrow from family though - that can get complicated.

getmore4less

Offset

best of both worlds for the setup costs.

Probably worth it just in case the refurb overruns or family need some money back.

Once set up you can offset 100% so no interest.

peterwalker1984

Sorry I wasn't too clear, it's savings left to me by family. So wouldn't be borrowing at all. Doesn't need repaying to anyone.

It's not a property I'm looking at living in forever, just a first home as we have child on the way. I'd want to save for a larger house in a nicer area in future.

I work out that I'd save over £1,000 a year in interest payments. So does seem like a no-brainer really. Just seems a lot of eggs in one basket!

peterwalker1984

At the moment the savings I've got are earning next to nothing in interest, whereas I'll be paying 3.29% on the mortgage.

From what I've been reading a lot of savings are losing value as the interest rates are so low. That's what's making me think of using them all to avoid the mortgage. Seems to make sense!