AIBU to be absolutely terrified of buying a house when I should be in a decent financial position?

I can empathise. It’s so consoling having a big buffer especially when you’re self-employed, but I agree with one or two others that having an even bigger deposit will bring down the debt and (possibly in the future reduce anxiety?). To get the savings back up consider a lodger (maybe someone who stays
Monday to Friday) or Airbnb the room. Also agree with not going with very long mortgage terms, as tempting as it is to pay low-ish repayments every month.

Actually in OP's position I'd be looking at putting down a deposit of £100k, using the £15k from family on fees and reno (then they can really see where their money is going), keeping back £50k (about 18 months incomings as it won't be taxed) and then spreading the £140k mortgage over 35 years. Would make the monthly payments about £700 based of 5% interest, and could then overpay by £3-400 a month giving imo the best balance of flexibility and liability.

But think of it like this - what's the alternative? Well, it's renting and then you're paying someone else's mortgage and you have nothing at the end of it!

I got on the housing ladder at 20. With no savings. I'm now almost 57 and I am clearing the mortgage balance next month. The house is worth about £340k, and I will be able to live in it rent free for life, because it's all mine! And that's with a costly divorce behind me, otherwise I'd be mortgage free in a house worth double that.

Houses appreciate at a rate of circa 4% per annum, so you are living in a very valuable asset. Your equity will build and build, and you will be mortgage free in old age.

You're in an unbelievably fortunate position. I can't believe you're posting this really.

You are in a great position, but yes it is nerve wracking!

Keeping some savings to cover unexpected things is prudent - but I wonder if you have too much savings? Mortgage costs are all about compound interest - just like saving. So the longer you borrow and the higher the interest, the more it will cost.

A lower Loan to Value gets a lower interest rate. A shorter term lowers the total pay back. In your situation I suspect using more savings to lower the mortgage might make sense.

Some points to help:

• Most fixed mortgages can be overpaid by 10% each year. Check the details.
• If you are really stuck between roles you could ask for a mortgage holiday.
• The ability to take a lodger is great. The closer the lodger income is to covering the mortgage payments then the more housing security you have.
• Agreeing a longer term is another option you can negotiate with a mortgage company later on at re-mortgage point.
• You will need money for repairs, furniture, insurance etc. Also hold £1k available for potential fees for remortgage time.
• Long term fixed have an exit fee.
• You might find no arrangement fee mortgages are cheaper than those with fees despite the higher interest. I have (similar size mortgage), using the equivalent amount as the fee as an early repayment usually knocks £1k off the principal debt.

The key thing is pay as much off as you can as early as you can without getting into trouble. Know you options for flexibility in future if things change so you aren't worried when things change.

I totally understand where you are coming from. I have some money saved for a house and because it’s been nice to have the financial cushion, I’ll be worried once I no longer have that (even though I’ll have a house). I appreciate I’m very fortunate before anyone comes at me, but I do understand. Particularly if you are buying alone.

It is terrifying! When I first bought my first and favourite house I used to have nightmares that it was taken off me!

I bought without savings at 4% with Northern Rock! It then collapsed.

It was initially a struggle but honestly once you are in, you've got the things you need and you can chip away at your mortgage you'll feel amazing.

My favourite house repaid me in years of happiness, memories and I made quite a lot of money!

Why do you assume that it's cheaper to pay a mortgage than rent? That's not necessarily the case. It will depend on the area and lots of other factors, including what happens to mortgage rates over the term of a very long mortgage.
I don't think anyone is proposing that the OP or anyone else rents forever and into retirement but it isn't necessarily a great financial decision to buy a house as soon as you can, especially not in a falling market, like now.

But you bought in the mid 1990s, the best time for anyone to buy in recent memory! That was purely based on luck at being born in a certain year.
If the OP buys now, she is likely be looking at a depreciating asset for some years, at least, as the market is falling in many areas. We can't assume that houses will continue to rise at 4/5% every year (less in real terms) just because they did in the last 30 years.
I'm not saying that @BeQuaintLion should not buy but she should not buy assuming that it will be a great financial investment just because some other people were fortunate.
@BeQuaintLion , can I ask why you want to take such a long term if you are buying in your mid 30s? You could shorten this and waste less money on interest? If it's not cheeky, can I ask how you managed to save up so much? It seems like a lot of money to have saved on your salary? Are you renting or living with family? You don't have to answer, obviously, but it may be worth thinking about these things before you make your decision.

Just do it. You have a decent buffer if work slows down. If there is a recession interest rates will fall through the floor anyway. If your business slows down you can find a regular job. The earlier you get in the market the better because it is simply time in the market rather than timing the market that builds capital.

Housing values can fluctuate and stall but generally go up over time. Also it's the only capital purchase you will make that you can also live in! My first purchase was 240k at 24, my most recent 1.04 mil which has now appreciated to 1.7. If you can put even more of that deposit into a slightly nicer property I would do it. It's supply and demand that causes price increase (inflation) so the area you buy in is critical. It has to have what alot of people want or might want in the future.

I do also think that people quoting that your rent/mortgage should be a 1/3 of your salary have absolutely no idea how expensive it is to rent/pay a mortgage at the moment.

I’m think your anxiety is causing you to make some bad financial decisions. How much interest will you make on the 100k you are keeping back compared to how much you’re paying on the mortgage? If the latter is more, then holding onto 100k just in case, is not sensible. Also, as someone else said, your loan to value will influence what interest rate you’ll get, so by scrimping on the deposit you’re paying even more interest to your mortgage provider. Your 35 year mortgage is also hair raising considering you’re only 30. Yet another way to give more interest to your mortgage provider. If you want to keep your payments affordable, put in more deposit.

You say in your panic you’ve looked at how you’d get by living on your savings. In a nuclear scenario you could always sell your property. You aren’t locked in for life. If you’re sensible you’ll make sure the property you purchase is desirable enough, ie not next to a train track, no bus stop directly outside your front door, not opposite a noisy playground, near enough to transport, if a flat, no bananas service charges, long enough lease etc…

You’ve obviously worked hard to save the money you have, make it work for you. If you are keeping a lot of money back, worth knowing that Martin Lewis recently demonstrated how those who invest some in shares do better than those who put it all in fixed interest rate accounts. I wish someone had told me this at 30.

It’s a bit different when the OP has worked hard for the money and hasn’t been handed it on a plate.

How am i fortunate? I haven’t inherited the money or been passed it.

Did you not know that other people can work very hard & make sensible financial decisions and still struggle to ever amass wealth enough to buy their own property? It's a thing, anyway.

Buying was hard for me because didn't like going into debt, I didn't like pinning my residence to one place for a long period, plus I am useless at interior decour or DIY, but facts are that buying is normally a good financial decision, even for someone self-employed like OP.

Why are you keeping so much cash at your age. I would put a lot of your money into the house to reduce the mortgage and interest. I would start a good pension, have good income protection from illness, life assurance on the mortgage and mortgage protection and keep 30k ish for money you need in case of an emergency and focus on getting the mortgage paid. You will need to pay out so little money over a lifetime of a mortgage if the amount you draw down is the lowest it can practically be.

Do you want to be paying massive rent and risk homelessness as a pensioner? If the answer is no then buy a house asap.
I bought my own home at 21 as a single parent with no savings.
I havent paid any mortgage or rent in decades and saved all that money instead.
You home will always be your best investment.

Good for you. I'm sure you have worked hard to build up your business. The earnings figures you gave were pretty misleading!
If I were you, I would put down more cash, as others have also suggested.

That's very dramatic! There is a middle ground between being destitute as a pensioner and rushing in to buy a house immediately.
I wouldn't be possible to buy now as a single parent at 21 with no savings. Times have changed and young people need to be far more considered in their decisions nowadays.

Sounds like a good plan.

Would it be worth you looking into an offset mortgage.
You would need to investigate this throughly to see if it meets your needs.

have you been making pension provision too? It’s tax efficient, and, speaking as another self employed person, reassuring to know there’s some future income working away in the background. As long as you’ve got a year’s salary saved, you can afford to unclench a little - psychologically hard though it can be!