Mortgage and savings

I will be buying a house in the near future. I have savings built up. Should I put my savings towards buying the house ie. try to avoid taking out a mortgage at all or should I hold on to some or all of my savings and take out a mortgage to buy house?

What would you be doing with the money if you didn't use it to reduce your borrowing needs? Would it be earning more than you would save by reducing your borrowing requirements? Could you get a lower rate due to a lower LTV ratio if you use the savings to subsidise the purchase?

If I didn't use it to reduce my borrowing needs I would probably put the money on a low reisk deposit eg. Post office saving cert. I don't see myself dabling in the stock market for example. As far as I know there is not a whole lot of difference between deposit interest rates and mortgage interest rates. I would have to be getting a very large return on my money on deposit to offset the interest I would be paying on the mortgage??

port1 said:

If I didn't use it to reduce my borrowing needs I would probably put the money on a low reisk deposit eg. Post office saving cert.

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You can get much better rates on deposits than with An Post even after the tax free nature of many of the latter's offerings are considered. See the Financial Best Buys forum lists of the best deposit rates on offer.

I don't see myself dabling in the stock market for example. As far as I know there is not a whole lot of difference between deposit interest rates and mortgage interest rates. I would have to be getting a very large return on my money on deposit to offset the interest I would be paying on the mortgage??

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If the option was deposits or reducing the mortgage and thus reducing your interest costs on the loan then I personally would probably go for the latter (obviously you may want to keep some of the savings on deposit in an "emergency fund" to cover a few months' living expenses in a worst case scenario or other rainy day situation). On the other hand it may be that a particular mix of c. 5% lump sum demand deposit and c. 7% regular saver accounts could yield better returns than reducing your mortgage borrowing even after DIRT. You would need to crunch the numbers for any specific scenario to know for sure. On the other hand if you use savings to borrow less and maybe even over a shorter term then your interest bill will be (probably significantly) reduced and your mortgage protection life assurance premiums will also be lower. You can use the calculators on this page to estimate deposit interest returns on lump sum and regular savings accounts and this page to estimate the potential savings attributable to using savings to reduce your borrowing requirements and/or to accelerate the repayment of a mortgage. If in doubt about the best course of action for your specific needs then maybe get independent, professional advice.