Personal Savings & Mortgages

[DOS19]

Is it worthwhile investing ones savings into a property purchase?

My purchase will be €260,000 and I have savings of approximately €45,000. I have received approval to borrow 100% of the purchase price, which will equate to approx 38% of my net take-home pay.

From what I can gather, the slightly better (LTV) rates available to me if I invested this money (or part of this money) would not be justifiable given (i) the opportunity cost of earning interest on my savings and (ii) having this money available to me should I ever need it.

My view is that I am better off borrowing the 100% (as it is available to me) and keeping my savings. If my mortgage ever became onerous I would use my savings at that point to pay-off a lump sum off the mortgage.

I’d be grateful for any views as to whether my analysis of the situation is sound. I am in mid-twenties if that has any relevance.

Thanks

 

[ClubMan]

I didn't think that 100% mortgages were available these days? Are you sure that this provisional (?) loan offer is still available? What lender and rate?

I presume you're talking about an owner occupier property and not an investment/rental property?

Have you factored things like owner occupier mortgage interest relief, DIRT on deposit interest, the impact of loan amount and term on total mortgage costs, the impact of loan amount and term on mortgage protection life assurance premiums, the fact that borrowing while saving often makes little sense etc. etc.

In short - have you crunched all the numbers? And then considered whether or not now is the right time for you (personally and given market conditions) to buy a property?