Better to Buy a House With, or Without a Mortgage?

MoneyMan01

I am living with parents and have managed to save up quite a fair bit of money.

I'll be looking to purchase my own house one day and was under the impression that it would always be better, if you could, to buy a property outright to save on paying interest fees on a mortgage to a bank?

I've since seen some people suggest that buying a house with a mortgage would be the better option?

Is there any pro's and con's to either option and what actually is the best option?

Unicorn_cottage

Depends on so many scenarios...in my situation I could buy a house with a very small mortgage then borrow money to carry out works but instead I am going to get a bigger mortgage so I have the cash to carry out the substantial amount of works. The rate of a mortgage is well below the cost of a loan etc.
So for you if you buy the house for cash will you have any money left over for say doing works to the house, for an emergency fund etc? Some would say you would be better off investing at least some of the money but that is not something I have experience of.

davidmcn

It really depends on where else you think you could be investing your money (or whether you're likely to want the cash to spend on something else).

AdrianC

It's the same as anything.
If you don't need to borrow money to buy what you want, then you won't pay interest and other loan fees.

Yes, you can invest the money elsewhere instead - but will you receive more in post-tax interest than you're spending on the borrowed money?

There's nothing magical about a mortgage. It's just a big bank loan secured on an asset.

Greymug

TheDarkKnight93 said:

I am living with parents and have managed to save up quite a fair bit of money.

I'll be looking to purchase my own house one day and was under the impression that it would always be better, if you could, to buy a property outright to save on paying interest fees on a mortgage to a bank?

I've since seen some people suggest that buying a house with a mortgage would be the better option?

Is there any pro's and con's to either option and what actually is the best option?

Depends on your circumstances.

If to be in a position to buy a house without a mortgage, I had to save money and therefore live with my parents....I'd rather kill myself.

I personally would rather get a mortgage and get the hell out of my parents' nest pronto. But I appreciate there are people who don't mind that, and actually kinda like being a mama's boy in their 30's. So yeah, depends on your circumstances and what you want from life.

Nebulous2

A mortgage is very cheap at the moment, in historical terms. Which means most of your payment is going to pay down the loan. Houses have traditionally risen in value faster than the increase in wages. 

Put both of those together and people want to get into the market in case they miss out.

For most people they will take many years, possibly tens of years to save enough to buy a house, while often still having to pay housing costs. Again that contributes to a desire to buy as soon as possible, requiring a mortgage. 

MoneyMan01

Useful feedback.. Thanks!