First Time Buyer - Use full mortgage offer or full savings?

PixarFan

Hello, I am 28 years old and earn 29k a year - I am also a first time buyer. I have recently been approved a mortgage of 140k and I have a deposit of 70k. There, my budget being £210,000. I have not decided on the exact mortgage product yet (that will come when I find a house) however, my mortgage will be between £450-£550 a month.


I may not go as high as £210,000 but it is nice to know that is my limit if I find the 'perfect' house. I am going to view a property on Tuesday which is on the market for £190,000. I think I can get this down to £180,000.


My question is, I have £210,000 to 'play with' between my deposit and 'mortgage'. I just need some advice if it would be wise to still use all my available mortgage and keep back some of my deposit or use all of my deposit and cut down on the mortgage?


FYI - In addition to the £70k deposit, I would still have 6-7k savings.


Thank you!!

Strummer22

It depends entirely on what you want to do with the money.

If home improvements on whatever place you buy it obviously makes sense to use the full mortgage.and keep some of your deposit back.

You may do what I've considered (although I'm not as far along in buying my first home as you), which is leave some of the deposit back to invest in a stocks and shares ISA over a 5-10 year timeframe, with a view to growing that money and paying off the mortgage sooner.

Or maybe you want to keep £20k back to spend on a new car or foreign holidays? I wouldn't judge you for it but that's not exactly the MSE way!

kinger101

I'd hold some money back too. Particular as the difference between the interest rates on the different LTVs are negligible now. I'd probably keep £10-£15K in cash, and the rest in a stocks and shares ISA.

metamatic

I don't know how secure your job is or whether you have a wealthy family to fall back on but I think you are taking a big risk leaving yourself with so little savings.

A large chunk of these will be wiped out in buying expenses and furnishing the property so you could well end up with a few grand left which is probably only enough to tide you over for a couple of months if you lost your income.

I'd advise to work how much you need to survive if you had no income for 6 months and ensure that you have at least that put aside as ready cash.