Need 75k- mortgage, loan or something else?

newlease

Hello,

I am looking to buy my first home (a flat in the overpriced South). I'm currently renting. Here are my details, how should I proceed?

Savings available= 175k. Scattered around multiple accounts, instantly available for the house purchase. I have built this up over the last 15 years working very hard. I know not everybody agrees with this practice ("it is a waste") but my personal circumstances particularly last few years required this approach.

Emergency fund= 25k. This is quiet a huge fund, I know, it is enough for at least 2 years survival, I am a very cautious person.

Savings unavailable= 40k. This is my S&S ISA portfolio's value currently. I am investing long term for my retirement here in addition to my pension. I like to "ignore" this amount and would not like to touch it unless my emergency fund were to run out in a disaster scenario.

Debt= 0.

I am single, approaching 40 and earning 60k on a stable income. I would be able to pay back 1000 a month and up to 2000 most months (or equivalent at the end of the year). I would like to pay off in as short time as possible, 5 years sounds about right. I plan to purchase something within months and would like to secure the availability of the loan within weeks.

Thanks.
Lisa

tonyh66

not really sure what your asking? just get a mortgage. Use an online calculator to see what size you can get using your yearly salary and most of your accessible savings as the deposit. Use the number of years to retirement as the term and just make overpayments to reduce it.

If the mortgage required is £75K what is the value of the flat? For a LTV of 60% you would only use £45k of your savings as a deposit. Are you thinking of using the £175K and adding it to the £75K to get a flat for £250K?

ViolaLass

newlease wrote: »

Savings available= 175k. Scattered around multiple accounts, instantly available for the house purchase. I have built this up over the last 15 years working very hard. I know not everybody agrees with this practice ("it is a waste") but my personal circumstances particularly last few years required this approach.

You won't find many on here saying that saving isn't sensible.

newlease

tonyh66 wrote: »

not really sure what your asking? just get a mortgage. Use an online calculator to see what size you can get using your yearly salary and most of your accessible savings as the deposit. Use the number of years to retirement as the term and just make overpayments to reduce it.

If the mortgage required is £75K what is the value of the flat? For a LTV of 60% you would only use £45k of your savings as a deposit. Are you thinking of using the £175K and adding it to the £75K to get a flat for £250K?

I am asking whether a mortgage or loan makes most sense in this situation.

Yes exactly, I would like to use my 175k in savings to purchase a 250k flat. I do not want to extend timeline to retirement (25 years) and want to use all or as much as possible of the 175. There is no benefit in borrowing more or for longer in my situation.

Does a 30% LTV 5 year mortgage make sense? What are the benefits over a regular loan?

newlease

ViolaLass wrote: »

You won't find many on here saying that saving isn't sensible.

Indeed, I just wrote that because sometimes people question why I waited so long and saved so much rather than getting into a 25 year mortgage at 80% LTV. Most conversations affected by London pricing usually go like this.

Thrugelmir

A mortgage is a loan. The term mortgage relates to the legal charge placed on the property to secure the debt. To buy a property you'll need a mortgage.

dealer_wins

Wow probably the most financially sensible OP this forum has ever seen!

You will have no problems getting a mortgage, but will probably get one with a 25 year term and have to overpay it each month, so make sure to get one without any penalties for doing this.

ViolaLass

newlease wrote: »

Indeed, I just wrote that because sometimes people question why I waited so long and saved so much rather than getting into a 25 year mortgage at 80% LTV. Most conversations affected by London pricing usually go like this.

I would assume that you hadn't wanted to buy. If it were another reason, I'd be interested hear it but I'm not judging.

ThePants999

A mortgage is simply a loan that's secured on the property. You won't be able to get an unsecured loan of that size. I assume you have no other asset worth that much or more on which to secure a loan. So you'll need a mortgage.

tonyh66

Can you get a LTV of 30%?, im not really sure why you don't want to extend the term to 25yrs, it doesn't mean you have to take that long to pay it back, just make the maximum overpayments and hold some of your savings back.

creditscoremeansnothing

Move to the north!!
Im 36 and my mortgage is paid off in 2 years.
Prices down south are shocking and we are much nicer up here :):)

Good luck though.