How best to use money when buying first house?

[FTBuyerLondon]

I would really appreciate some advice as I’m not sure what the smartest solution is.

My boyfriend and I (28 and 29) are buying our first home in London using Help to Buy and our offer has been accepted. We have a deposit of 20% of about c.90k (boyfriend’s inheritance), plus 40% Help to Buy. So we are looking to take a mortgage out of 200k (currently at 5.5%). For context, our joint income is 90k.

We are buying as joint tenants and originally he was providing our whole deposit and we would make mortgage repayments equally. However I have recently (as of a few days ago) come into some inheritance (roughly 30k). I am unsure what the best thing to do with it is after I clear some personal credit card debt (4k).

We wanted to do some minor renovations to the house and we need to buy new furniture - roughly 15k total. Originally we were going to save up for this out of our salaries (would probably take about 6 months to a year). I am unsure now of whether I should use my inheritance to fund this straightaway and put the rest into savings? Or whether I should put this toward a larger deposit so we need to borrow less and lower our monthly repayments?

Just for a bit more info. Our monthly repayments are already relatively low, especially considering our high current rent and we would be able to afford the monthly repayments on just my salary alone. So I am tempted to use it to make the house nice sooner and restart our savings, which will be mostly wiped out after this house purchase. But given current interest rates maybe it is best to borrow less and have a larger deposit?

Any advice would be very gratefully received

I would pay an extra 20k off the mortgage.

make sure your deposits are ring fenced legally

what is your monthly repayment going to be?

if you are getting help to buy how much of your home will they own and could you consider reducing that part of the loan?

Thank you for this. Our monthly repayments will be £1083 and we currently pay over £2k in rent. If I contributed an extra 20k to the deposit, it would bring our repayments down by £100 or so.

I suggested to bf that he might like to ring fence his deposit or buy as tenants in common, but he said he was happy to buy as joint tenants. I will revisit this with him - I am not sure if buying as joint tenants necessarily precludes ringfencing our deposits?

The Help to Buy loan is 40% of the property value, but it is interest free for 5 years so it made sense for us to borrow the full amount. We can only make repayments in one go (when house is sold) or in large tranches, but it doesn’t make sense to do that now as we aren’t making repayments until the 5 years is up.

Can you do less help to buy and own more of it?

Yes, I think we can use less than the full Help to Buy allowance - but if we wanted to own more of it, would it make sense to borrow less from our bank rather than less from H2B given it is initially interest free for 5 years and our bank interest rate is at 5.5?

Although the h2b is interest free for 5 years, it is usually linked to the value of the house so should the value rise the loan amount increases

H2b means if house prices rise you will pay a lot more back. It doesn’t sound like you really need h2b, can you do it without?