How to Fund House Purchase

Changeoffortunes

[FONT=&quot]Hi Guys,[/FONT]
[FONT=&quot]I have been “lurking” for a while but this is my first post and would appreciate any advice. Long story short, I have recently received a semi-unexpected inheritance and, whilst this will allow me to realise my dream of purchasing a house I am not sure which route to take.[/FONT]
[FONT=&quot]I now have the huge (by my standards) sum of £98,000 in my account:eek: !! Having made provisional enquiries I should be able to obtain a mortgage of up to £75,000. As I am no spring chicken it would need to be paid off within 12 years, hence the fairly low lending.[/FONT]
[FONT=&quot]Now, I am not sure whether to purchase a house outright around £90,000 which would get me a small 2up-2down or whether to go the full hog and look for something in the £150-£160,000 bracket.[/FONT]
[FONT=&quot]Also, if I was to see something I liked around the £120,000 mark would it be feasible to take out a loan rather than a mortgage ? Are there any obvious benefits in going down the mortgage route rather than a personal loan for say £25,000 ??[/FONT]
[FONT=&quot]I appreciate there will be costs involved with purchasing a house and think it may be wise to keep some money aside for an emergency fund. However if I purchased a smaller property I may be lucky enough not to have any mortgage to pay so could save up an emergency fund relatively quickly.[/FONT]
[FONT=&quot]I also think that as I have never had this money I might as well put the majority of it down as a deposit, given that the savings rates at the moment are so low. Is this wise ?[/FONT]
[FONT=&quot]Thank you in advance for reading and any advice is gratefully received :beer:
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gaz_moose

don't forget to factor in the various fee's like solicitor (£1500) survey (£500) mortgage (£1000) removal men (£??) etc.. then a bit of decorating. id buy the type of house you need.

as to the loan VS mortgage it depends on the interest rates and the terms I guess you need to do the maths.

Changeoffortunes

Thanks for your advice Gaz. Think I need to put quite a bit by for fees etc., just in the process of getting quotes. Having read some of the threads it's not quite as simple as finding a house that fits and handing over the cash. :rotfl::beer:

FtbDreaming

If it was me I'd go for a house in the £98000 then enjoy the rest of your years enjoying the money youre not paying in rent or mortgage.

MovingForwards

One of the t&C's of a loan tends to be the loan cannot be used for a property purchase or its associated costs.

Would you be happy to retire into a 2 up 2 down or would you prefer to be in a bigger house? A bigger house means you can downsize if needed.

Benefits of a mortgage is the lower interest rates than a loan. But although £25k mortgages are around, you get better rates if you borrow more.

If you see something you like for around £120k consider taking nearly the full amount of mortgage possible, top the rest up with your money and that will leave you a healthy amount for doing any unexpected repairs, perhaps a bit of decoration, carpets etc and keep the rest as a rainy day fund.

Depending on your wages you could also make overpayment to the mortgage to get it cleared quicker, most mortgage companies allow 10% of the outstanding money to be overpaid each year.

Changeoffortunes

Sorry new to the forum so not sure how to quote

FtbDreaming - thats what I'm thinking, but then I see something more expensive and start to raise my expectations :rotfl:


MovingForwards, Thanks for the advice about loans, I didnt realise that a loan couldn't be used for house purchase so that rules out that option. I am tempted to buy bigger and then think about down sizing as I would probably wish to move out of the area when I retire. I had thought about over paying which is why I did not want to stretch myself too much on the amount borrowed. At the moment the monthly payments I have been quoted are more than affordable and the intention is to try to bring the term down as much as possible whilst I can.


I am going to look into the possibility of an offset mortgage too, that way I could still keep some savings to one side for emergencies.


Thank you all for your advice,:T I have a lot of thinking to do.