Larger mortgage or money

Conversations 3

Hey,

Looking for a bit of advice on what we should do.

Have savings of approx €400,000, no debts or properties.

We are going to build a house which QS said will be around the 400 mark.

Should we go half and half mortgage and savings or bigger mortgage and invest savings?

Thanks.

We won't be earning as much in the future as we won't be working as much, we have been flat to the mat to save this much.

Fol20

Conversations 3 wrote: »

Hey,

Looking for a bit of advice on what we should do.

Have savings of approx €400,000, no debts or properties.

We are going to build a house which QS said will be around the 400 mark.

Should we go half and half mortgage and savings or bigger mortgage and invest savings?

Thanks.

We won't be earning as much in the future as we won't be working as much, we have been flat to the mat to save this much.

Get the largest loan you can afford. Do not invest anything until the dust settles and you complete the build. The more cash you have left over the better as builds can always have more costs and you should have a contingency of circa 20pc.

Conversations 3

Fol20 wrote: »

Get the largest loan you can afford. Do not invest anything until the dust settles and you complete the build. The more cash you have left over the better as builds can always have more costs and you should have a contingency of circa 20pc.

Yea, I'm afraid the costs will blow up, but QS is confident he can keep it under budget and not let it run away.

Going for just above 230 mortgage and finish the house as we can after it's sealed up.

Then hopefully invest the rest and add to pensions and a rainy day fund.

Some people say max out mortgage and invest savings instead but don't want a huge mortgage when we can avoid it.

blackbox

Conversations 3 wrote: »

Yea, I'm afraid the costs will blow up, but QS is confident he can keep it under budget and not let it run away.

Going for just above 230 mortgage and finish the house as we can after it's sealed up.

Then hopefully invest the rest and add to pensions and a rainy day fund.

Some people say max out mortgage and invest savings instead but don't want a huge mortgage when we can avoid it.

Make sure you get a mortgage where there is no penalty for paying off some of the lump sum.

When the house is finished, if you find yourself with surplus funds the best thing for most people would be to reduce the mortgage.

It will be difficult to find investments that will return more than you will save by paying off the mortgage.

Q&A

I'd echo the previous advice. Max the mortgage and pay off what you can afterwards. Yes it'll cost you a little more but consider it an insurance policy. You want to avoid having to go back looking for money for overruns.

If you go with a mortgage provider who offers cashback it might be financially beneficial to over borrow especially if you know you can pay back the money reasonably quickly.

Padre_Pio

Get the big mortgage.

Better to be looking at it than looking for it.

markjbloggs

Q&A wrote: »

I'd echo the previous advice. Max the mortgage and pay off what you can afterwards. Yes it'll cost you a little more but consider it an insurance policy. You want to avoid having to go back looking for money for overruns.

If you go with a mortgage provider who offers cashback it might be financially beneficial to over borrow especially if you know you can pay back the money reasonably quickly.

Why ??

Conversations 3

There won't be any over run, 400 is the budget and that's that.

That's one thing I'm adamant about, if any else is required it can be done over the years after the build.

Calahonda52

Conversations 3 wrote: »

There won't be any over run, 400 is the budget and that's that.

That's one thing I'm adamant about, if any else is required it can be done over the years after the build.

Not the right approach, how often will the QS come on site to make sure its not overrunning: weekly? I doubt it
what happens when you dig the founds and you find the need to use piles?
So what happens if the thing is 3/4 built and you have spent the 400?

3DataModem

Get a mortgage you can afford, then after the dust settles pay as much off as you are comfortable with.

Conversations 3

Calahonda52 wrote: »

Not the right approach, how often will the QS come on site to make sure its not overrunning: weekly? I doubt it
what happens when you dig the founds and you find the need to use piles?
So what happens if the thing is 3/4 built and you have spent the 400?

I'm not building the children's hospital, prices have been received from sub contractors and material suppliers.

The QS estimate is for a high standard finish, cut backs can be made at any stage.

bee06

Fol20 wrote: »

Get the largest loan you can afford. Do not invest anything until the dust settles and you complete the build. The more cash you have left over the better as builds can always have more costs and you should have a contingency of circa 20pc.

This is what we did.

I would say that the “do the bare minimum to move in and the rest later” approach can mean the rest doesn’t get done for a very long time. I know a lot of people who have done this and were still working on the house 10 years later and ended up spending more money in the long run.

The J Stands for Jay

bee06 wrote: »

This is what we did.

I would say that the “do the bare minimum to move in and the rest later” approach can mean the rest doesn’t get done for a very long time. I know a lot of people who have done this and were still working on the house 10 years later and ended up spending more money in the long run.

I had relatives who did this, and "the rest" didn't get done until just before the place was sold, 25 years later

Conversations 3

McGaggs wrote: »

I had relatives who did this, and "the rest" didn't get done until just before the place was sold, 25 years later

My partner won't let that happen, she'd move out if it wasn't finished within a year of moving in.

Bubbaclaus

Conversations 3 wrote: »

My partner won't let that happen, she'd move out if it wasn't finished within a year of moving in.

Jakers!