I separated from my ex-husband 2 years ago and earlier this year we sold our family home. I’m quite content with renting for now until I decide where I want to live and find something I want to buy. The problem is, I have a fear of letting go of my house sale money to put towards a new purchase. It’s quite large sum and seeing it in my account gives me a sense of financial security - if my car died, I’ve got cash to repair or buy a new one, if there was a family emergency, I know I could easily pay for medical treatment (I have insurance) or travel to be with loved ones. If I put all that back into a new mortgage, I’d have very little savings or back up finances if something was to go wrong.
How can I get over this? I know I’d be better off buying rather than renting, but having this cash sitting there gives me some financial breathing space in case something was to happen. My new mortgage would be small and manageable but it’s just letting go of my buffer that worries me as a newly single person who still has kids to manage.
3 Replies
Why not both?
Hold back 20-30k.
Get your mortgage.
Chuck the rest into an offset, or organise a redraw facility on the mortgage. While you're not using that money it offsets your interest. When you need it, you pull it out.
I suggest creating the extra layer of security you need to feel safe before investing in a property.
Continue to save into a separate account so you have another buffer.
Put the required deposit down for your property & any extra as redraw funds in your mortgage.
Change how you view it - money in an account, used for emergencies or leisure, will eventually run out & you'll be in a far worse position.
Sounds like you need a savings balance. It is very scary having no backup plan: as a single parent: it all hangs on you.
And turn your thinking around on the thinking. The rental situation is dire right now, being part of that is really unstable - moving frequently and paying heaps will burn through that money. Car repairs, medical treatments, holidays, will all burn that money away and you’ll be standing there with nothing to show.
Buy a house and you have the security that you need when you have kids, a permanent home. And when other hills come up, guess what, you’ll still find a way to cover them. But if you have cash you could keep a 20,000 savings balance in the bank for an emergency backup. Most single mums can only dream of being in that situation.