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FTB Mortgage Choices

edjones84
Posts: 3 Newbie
Hello - MSE newbie here.
I am a potential first time buyer and would really appreciate some advice from the community.
I've spent my 20's and a lot of my 30's paying London landlords thousands in rent but happily I've progressed in my career to a stage where I can save a decent amount each month. I have £20k saved and some cash in a Help to Buy ISA so am now in a position where I can consider buying my first home.
I'd like to buy a property in a town commutable to London with 2-3 bedrooms and a garden so expect I'd need to spend up to £400k.
I am spending over £1,500 a month renting a 1 bed flat in London so feel I could be putting this money into a mortgage.
My options are:
1) Buy a £400k property with a 5% deposit as soon as possible. Receive unfavourable mortgage rates but don't waste money on renting.
2) Wait until late next year when I have increased my savings so I can buy a £400k property with a 10% deposit. Receive better rates but waste money on renting for another year.
3) Get on the ladder at the bottom by putting down a 10% deposit on a £200k house. Make big compromises on the location, property and quality of life. Possibility of saving deposit for a 2nd property and eventually renting out this first one.
I appreciate I am very lucky to be able to consider any of these scenarios.
Are these considerations that any of you have faced in the past? If so, what would you recommend?
What do you consider the best approach from an investment perspective?
Any advice would be very much appreciated.
Thanks, Ed
I am a potential first time buyer and would really appreciate some advice from the community.
I've spent my 20's and a lot of my 30's paying London landlords thousands in rent but happily I've progressed in my career to a stage where I can save a decent amount each month. I have £20k saved and some cash in a Help to Buy ISA so am now in a position where I can consider buying my first home.
I'd like to buy a property in a town commutable to London with 2-3 bedrooms and a garden so expect I'd need to spend up to £400k.
I am spending over £1,500 a month renting a 1 bed flat in London so feel I could be putting this money into a mortgage.
My options are:
1) Buy a £400k property with a 5% deposit as soon as possible. Receive unfavourable mortgage rates but don't waste money on renting.
2) Wait until late next year when I have increased my savings so I can buy a £400k property with a 10% deposit. Receive better rates but waste money on renting for another year.
3) Get on the ladder at the bottom by putting down a 10% deposit on a £200k house. Make big compromises on the location, property and quality of life. Possibility of saving deposit for a 2nd property and eventually renting out this first one.
I appreciate I am very lucky to be able to consider any of these scenarios.
Are these considerations that any of you have faced in the past? If so, what would you recommend?
What do you consider the best approach from an investment perspective?
Any advice would be very much appreciated.
Thanks, Ed
0
Comments
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An expert, who makes his living from offering advice to people in your situation, will be along in a moment. Perhaps consider it an investment to speak with them in more detail regarding your options.
FWIW, after some seriously complicated mathematics, we went with #3. It all depends though on how much you can set aside in savings, how much you can overpay, what your mortgage repayments are and a host of other factors.0 -
Rates with a 5% deposit are not that bad, 3-4% max in the main.
My first mortgage 4 years ago with a 15% deposit was around 3.3%.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Do you have a particular area in mind? I think this should factor into your decision.
In my commuting town there are flats going for £230k next to the station. There are 3 bed houses going for £450k in one area, and then the same sized houses for £350k, a massive difference. If you know the area and know the commute then 1) could be considered.
But if you don't, I'd go for 3). Get to know the area, get to know the commute. You can then overpay at a lower interest rate to get more of a deposit for the next place in 3 or so years, where you will have a better idea of where you'd want to live.0 -
You haven't mentioned how much you earn (and therefore how much you might be able to borrow).0
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I'm a contractor so don't have a huge amount of options but Halifax said I could borrow up to £500k based on my day rate. I would consider £450k my limit due to HTB ISA bonus though.0
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