To buy a house in cash even if it means smaller house and using savings?

[BoxAndKnife]

DH and I are 1st time buyers in the south-east. We are in the very fortunate position to be able to afford, potentially, to be cash buyers but it would mean a smallish property (eg 2/3-bed terrace) in probably a less sought-after area (but still perfectly acceptable imo).

We would also have to put some of our savings in as well to cover stamp duty, fees etc.

Alternatively we could apply for a mortgage, keep our savings, and buy a bigger house in a 'better' area. We are both over 40 so would be looking at a relatively short mortgage term eg 15 years.

The idea of being mortgage-free really appeals to me, though, especially as my 2-year plan is to set up my own business. It would be great not to have the worry of mortgage repayments. But we would definitely have to make more significant compromises on space etc.

What would you do? Does the freedom of being a cash buyer outweigh the negatives of a smaller place, or should you always buy the best house you can afford?

I was in the cash bracket then I saw the difference in house, and changed my mind. They're totally different classes of house. I'd go for a mortgage and look at an offset one.

Buy the nicer house in the nicer area! With a small mortgage and keep some savings.

Yes Covid taught us we have no idea of what jobs are ‘safe’ but it also taught us how important our homes (Or lockdown prisons!) are.
The interests rates are so low as well.

Good luck!!

Better house with mortgage

altiara

"Buy the nicer house in the nicer area! With a small mortgage and keep some savings."

I agree with this. A lovely home, an affordable mortgage and rainy day savings. Sounds good to me.

Mortgage at the moment likely to be cheapest loan you can ever get.

Speak to an adviser and find a product that suits you, perhaps an offset mortgage that gives flexibility.

t your ages I take it the smaller house will fit you for the rest of your lives.
A smaller house has other longterm savings (lower council tax, maintenance, property insurance) but none of those compare to the huge benefit and security of being mortgage free forever. Grab that chance with both hands, you'll never regret it. (We did, at age 45)

This country is in a terrible financial mess for years to come and in the very near future many people are going to lose their employment and income. Some who are unable to keep up mortgage payments will lose their home. Even people in work, and have an accident , or become too ill to work, become ill, can default on the mortgage and lose their home. You can future=proof yourselves agaibst all that.

OTOH, people with a totally secure home will always have the option to use it to make an income ( work from home, take a lodger;).
If they become ill they still have a home to live in (and can adapt it to suit changed circumstances)

   With no rent or mortgage to pay, you will probably find you're saving money quite effortlessly and  can either enjoy an enhanced lifestyle , or invest it  for future use. We did both. It meant that  if we ever wanted to move house; we still could and did ( always mortgage free again) and trust me, selling and buying property is  much easier  when  you're  chain'- free. 
   
     .