First-time buyer looking for advice on deposit

[ShortLashes]

Hi all, I'm finally in a position to buy a flat. I could just about put down 25% deposit but taking into account survey, legal fees etc, this wil leave me with about £2K savings. I'm working full-time and have no kids so can build on this each month, but I'm nervous about putting so much down. Should I go for it or leave myself a bigger reserve by sticking to a 20% deposit? Any words of wisdom appreciated!

In that situation I would have put down 25% but I know I could rely on the bank of mum and dad if there was a problem with the property. How about putting down 20% and then if you find in a years time you built up more savings then start over paying your mortgage each month.

Thanks mostlyjustaluker, that sounds like a better option for me. I never knew I was so risk-averse till now!

Essentially, the more you can put down, the smaller the mortgage you will need to take out and the less it will cost you over the mortgage term.

You need to have a look at some mortgage illustrations - the difference in interest rates and overall costs of 80% loan to value and 75% loan to value would be worth looking at.

If you can save every month, you can also look at overpaying on your mortgage every month which will reduce the cost of the mortgage (how much you will pay in interest) overall.

I've no idea how much your 25% equates to, but it could be a huge amount and I can understand your qualms. I know I once read that your savings should be a minimum 3x monthly take home pay to give you a financial cushion if anything should go wrong.

Thanks wowfudge, it's really helpful to hear your thoughts. I have asked my mortgage broker to look at rates for 75% so I can compare and work out what the best thing to do is. At the moment I'm leaning towards sticking to a 20% deposit. This will leave me more of a cushion, allow me to do up the place more quickly, and give me the option to overpay when possible. I'm buying in London so the extra 5% equates to nearly £12K - which would take me quite some time to rebuild!

You can always put down 22.5%.