Buying a house, Save an emergency fund first or Deposit

mpjames1989

Hi guys, I wonder if we could have some advice on the above problem.
My fiancee and I are having a debate at the moment wether or not to save a emergency fund of £10,000 (6 Months Expenses) before we start saving for a mortgage deposit?

From my side I want this EF before we get a house because trying to save after buying a house is much more difficult and I like to have the security if one of us loses our job or can't work we may not be able to meet the minimum payments. Whereas if we had the emergency fund we have 6 months.

Whereas my fiancees opinion is is that she just wants to buy a house as quick as possible.

Opinions please oh wise people of MSE

freeman3030

Hi,
I would certainly say to save for your deposit first, do you have a rough idea of how big a deposit you need? In an ideal world, it would be lovely to have a buffer and its sensible to consider one. How long will it take to save the 10k? If it takes a year, house prices could have gone up where you live meaning you'll need an even bigger deposit which you haven't even started to save for. I personally would would put 90% of your savings in one account and 10% in the buffer account. So you're saving for the deposit and the buffer at the same time. Save like mad, the when you've got what you need (not knowing how quickly you can save) save for your fees. Then if you're ready start looking and when you're going through the house buying process throw 100% savings into your buffer account. I'm afraid you'll never have enough money when you own a home, but it's sensible to consider a safety net! Good luck!

Innys1

The advice to save for both is good though I' probably do it as 50/50. Odds are, you'd reach the EF threshold first so then, obviously, switch all to the deposit.

Only saving for the deposit with zero EF is, IMHO, bad advice. If the OP ends up buying a place with zero EF, how are they going to fund any emergency works once they move in? Moving from being a renter (presumably) to being a homeowner requires a change in mindset.

Kynthia

Saving 10k before you even start saving for a house seems like a massive delay and a luxury you probably can't afford. How much will house prices have risen while you save this amount and will you be paying out rent in the meantime?

Surely it would be better to buy a place that you could just about afford to run temporarily on one salary, giving up all luxuries and deferring many things until the other gets a job. That way you wouldn't need such a high emergency fund from the start and could build one gradually.

PasturesNew

I'd get the house done and dusted. Save for your deposit, then start looking for a house. By the time you find one you might find your EF has magically appeared anyway.

DandelionPatrol

mpjames1989 wrote: »

Hi guys, I wonder if we could have some advice on the above problem.
My fiancee and I are having a debate at the moment wether or not to save a emergency fund of £10,000 (6 Months Expenses) before we start saving for a mortgage deposit?

From my side I want this EF before we get a house because trying to save after buying a house is much more difficult and I like to have the security if one of us loses our job or can't work we may not be able to meet the minimum payments. Whereas if we had the emergency fund we have 6 months.

Whereas my fiancees opinion is is that she just wants to buy a house as quick as possible.

Opinions please oh wise people of MSE

It is all money when you save it, so just save it.

It only becomes house deposit [and emergency fund] when you actually buy a house. You need to look in detail at the emergency fund amount when you have a particular house in prospect, because you won't know how much you really need until you have the specifics for the property.

And IMO, 6 months money is far too much. This target could cost you dearly if house prices are on the march.

goodwithsaving

We saved for a deposit, found a house, saved a buffer while it all went through. Now we are back to saving a lot because the mortgage is cheaper than rent. When we moved I had £400 left, that was it. Yes there are additional overheads with owning but no time is ever 'the right time'.

GoldenShadow

People talk a bout saving six months of expenses on here, but I don't think that is particularly common for people who have just bought houses, or perhaps for a lot of people generally. I don't have many friends with savings, I know a few who live month to month and always have. Its a nice thought, but any extra money we had is already being signposted for things and I think an EF could be swallowed up if you suddenly come across a 'dream' house anyway, and prices really are going up month to month still in some parts.

If you can get a mortgage, I would assume you still have X left per month so that should help you start building a fund if you budget appropriately when you move in. We had about 4K 'spare' but that was also for appliances and we have had to have some electrical work done. We live relatively close to London so if for example, we lost our jobs, we would be able to look there and should be able to find something if we couldn't where we are now. We also have life insurance and income protection each, as I gather most people with mortgages do.

Also, I would never intend to live off them, but there are credit cards for emergencies too. With CCs and ODs, we have access to over 12K, none of it at an extortionate rate.