Should I put all my money towards flat deposit?

[whattodowithmonies]

I need help! I'm doing this on my own/for the first time, and every website I read has different info. I need advice.

I'm 33, single(and likely to be forever), and looking to buy my first home.

I have a very good job, and have spent the last 10 years working very hard(mainly because I have nothing else to do) and going on holidays. I therefore have quite a bit of money saved up(just sitting in an account).

I've decided that I want a pretty luxurious/city-centre/pent-house type apartment. Why not? I have no other responsibilities and living there would make me happy. However, these flats are pretty expensive(400kish).

My issue now is whether I put most of my money(keeping aside the required amount for emergencies) into the deposit, to bring my monthly payments down as far as possible? To me this seems the most sensible.

I have friends saying that that is a silly idea. They say I should put down about 20% to get the best interest rate, then invest the rest of the cash, as this will get me a better return on my money.

Does this sound like a good idea? I also know nothing about investing.

TLDR...would you put all the money you have available towards a deposit to get your monthly payments as low as possible, or save some for investing?

I know it's a long one so thanks for reading!

Most pol put all their savings towards a deposit. The bigger the deposit the better your LTV will be, giving you access to lower mortgage rates. You can build your savings back up.

Wait until next year anyway.

Mortgage interest rates are far more than savings interest rates. So your friends have got no clue.

God yes I'd put it all into the flat, that's a much better idea. It's true that interest rates for savings are rising but mortgage costs are too.

Obviously you need to allow some cash for moving costs! And I'd just be a bit wary of service charges in a flat like that but you would of course get benefits for the charge.

I'd always thought that I didn't know anything about money or investing but I've come to feel that keeping it simple - minimise your debt, try and save for the short and long term using an ISA, start a pension, choose a bank you can access easily, and never buy any financial product that's being advertised - is an approach that will work for most.

Some people play the markets and make decisions like that. I don't. I keep it simple. Pay off the house, save a little each month. I was never one for splitting the deposit and buying two flats etc. In your shoes, I'd pay down the mortgage. And congratulations on your new home x

Well I guess it depends how much cash you have & how affordable mortgage payments are but if you're not in a rush I would wait & see how the market will play out a bit.

Would the larger deposit get you into the next loan to value bracket? I think you need to calculate if it will only save a small amount on the monthly payment or put you into a different mortgage category.

I think put a bigger deposit but to the point where you still have a good pot for a rainy day. 6 months worth of bills if you can.

It's likely to be leasehold with a a hefty service charge , I strongly recommend avoiding

You sound disciplined, so put down a big deposit and then the money you save in monthly repayments you can save to rebuild your cash savings.

But look at ways of doing that. S&S ISAs are not necessarily doing well atm but over the longer term this could be a great moment to invest? (Look up loads of advice before doing this). Inflation is stripping away the value of cash right now.

This is kind of what I was thinking. Or at least have a bit of a buffer because the service charges can sometimes be surprisingly high. It's not all leaseholds but it seems a lot of them do come with big bills. Your solicitor should check the lease for ground rent increases and ensure they get all the info on any potential planned works etc from the management company.

Make sure you have a hefty ‘cushion’ of savings to protect you from one off service charges and other expenses. And try to choose somewhere with a low service charge unless you really want the amenities (manned desk, swimming pool, gym etc).

I would not buy the type of flats you are describing.

New builts are usually leasehold, very rarely do they come with a share of freehold, and they come with high service charge and a ground rent that might double over time.

You have no control on repairs and the service charge usually goes up quite quickly every year. Managing agents are usually pretty poor and charge a lot of ''admin and management fees' on top of repairs and general maintenance.

Also if you aware of the fire safety and cladding scandal you will know that many developers have been building properties which are really not up to scratch in the past 20 years or so.

If I were you I would buy a house instead, even if that means not living in the city centre, or buy a flat in a converted property that comes with a share of freehold so you have a bit more control.

What @Artygirlghost said.

Thanks for all the replies!

Regarding the type of flat I want...I am aware that they come with hefty service charges and have factored this into my affordability calculations.

With flats I do prefer the developments with gates/security/concierge etc. I am also checking that there are no strange ground rent clauses.

Seems like most people feel like putting most of the money towards deposit is the right idea. That's what I thought. Once I have a clear idea of all my outgoings, I can then start to build up my cash reserves again.

I'm really not one for trying to play the markets etc and I'm so clueless about investing (despite MANY attempts at understanding it).

I wonder if I would benefit from seeing a financial advisor/ planner?

It's certainly possible that a financial advisor would be worth your while - ask around for recommendations from people in a similar life stage or only slightly better off (I've been given some totally batshit advice by a very rich guy who had no idea about smaller amounts of money or what it'slike when you are the only backup).

If you have both a cash ISA for medium term contingency fund, and a stocks and shares ISA for longer term savings, you won't be doing too badly IMO.

For myself I took out income protection insurance. I decided against critical illness insurance. They are both expensive and not for everyone, but since you need to rely on yourself you may want to consider one or both.

Just as an example- I took out a really bad pension when I was 24. Maybe I could have sued for misselling but I decided not to. It's terrible and is always at the bottom of any league table of investments. But this dreadful pension that I paid minimal amounts into for about 2 years max 30 years ago will still probably pay out £250 a year when I retire. It's often better to take some sort of action than none imo.

It is so hard and requires a lot of discipline to accumulate capital through saving over a number of years. Buying property at the moment is risky. You could see all of your savings taken away by a fall in prices within a year.

I think a wait and see approach is the best option at the moment and let your savings appreciate for another year or two, if that's possible.

Speak to a mortgage broker