Property purchase v savings

[katmunchkin]

Following a property sale, I have c. £60,000 in savings / premium bonds. I'm currently in rental paying £625 per month but have found a property I'm wanting to buy. The guide price is £160-£170k. I earn £55,000 a year, no debt, no dependents.

I know this is a how long is a piece of string question, but how much deposit would you put down - 10% and then overpay to the max? Or as much as possible to reduce LTV, but then have limited savings? I'd want to keep some savings back just in case, but am playing with the figures to get the best mortgage rate v monthly repayments v still having a life!

I'd personally put in a bigger deposit, to get a better LTV and a cheaper interest rate. 5 year fix. Less debt, less interest to pay. I'd keep 10k back for emergency cash, but i wouldnt hold onto much cash at a time of high inflation as it devalues quickly. Also with your salary and that relatively small mortgage I'd be aiming to pay it off or the majority within the fixed deal. That puts you in a good position if interest rates keep rising.

I just don't like debt good or bad.

Definitely look for a mortgage that's comfortably below 75/80% LTV. I don't think you can significantly reduce your mortgage rate until you then get below 60% LTV but you don't have the deposit to do that. But obviously check what mortgages are available and have a play around with online calculators.

Think about what moving costs you have - not just fees, but any new furniture or improvements you're planning in the new house - kitchen, bathroom, heating, electrics etc. Anything that will save energy use is likely to be a good investment currently.

But the amount your mortgage costs per month won't vary hugely for a slightly bigger or smaller mortgage and as long as your income is secure, you'll always be able to overpay quite a bit (there's usually a 10% pa limit) and/or build up savings as with no dependents and a fairly low income multiple, you should have a decent amount of spare money each month, although that obviously depends on your lifestyle expectations.