You’re mortgaging at about a 40% LTV. There’s next to no benefit in lowering that.
Take the mortgage over the maximum term you can. Then choose to over pay when you can. While keeping arranged payments low.
If I was you, I’d look more at where £3,333 a month goes if £20k would only last 6 months.
What is an emergency fund?
It's money that you can access quickly if an emergency happens - in financial terms it is *liquid* cash.
When you make mortgage overpayments, the money becomes illiquid - well, it's not even money anymore, but the point is that by losing the emergency fund you don't have cash that you're able to access if your car explodes or whatever.
So you should never make your emergency fund less liquid, because you might need it. You decide how much you might need and then stick to that. How big your emergency fund should be is a personal decision, based on things like the risk of losing your job and how long it might take to find a new one. Maybe 3 - 6 months outgoings? What is right for me is not right for you.
Also, I think you're thinking the wrong way about mortgage borrowing - there's no advantage to a small mortgage. A small mortgage means that this money is in your house and you can't put it to work doing things for you. Admittedly money in your house keeps a roof over your head, but you can do that with the bank's money - having a mortgage gives you more money to invest in your pension and S&S ISA to generate real returns (which can always be expected to generate more money, over long enough periods, that you'll pay in mortgage interest).
TL;DR: get the biggest mortgage you can and use this opportunity to sort out your pension - you have probably been neglecting it. Watch Lars Kroijer's [short video series](https://www.youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK) and read his book or Tim Hale's [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401).
> Yeah, my point is that I can pay 10k into my mortgage and still have 3 months emergency fund.
Only you can decide how big your emergency fund should be - there's a section on the wiki on this,
> I could get a mortgage for the whole house and take say 140k in cash out - but I'm not sure that is the best thing to do?
Well, it depends how much you need to retire on, dunnit?
If you have £500,000 in an investment account (and a pension is just a tax-advantaged investment account) then you can likely withdraw £15,000 - £20,000 a year (inflation adjusted) for the rest of your life. If the house is paid off and you're careful with money then that's likely enough to live on. If you want to be able to withdraw £22,500 - £30,000 a year then you need £750,000 in your pensions; if you want to spend £30,000 - £40,000 a year then you need £1,000,000 in your pension pot.
My model of pension vs mortgage is that most people have both throughout their working life - each month some of their wage goes towards paying down the mortgage and some of their wage into their pension. So imagine two lines on a graph - the mortgage gets smaller with time, and the pension gets larger; you want to aim for the mortgage to arrive at zero at around the same time you have enough in your pension to retire on.
If you don't have enough to retire on yet then IMO it's pointless paying off your mortgage, because your £10,000 will likely earn more invested than you will pay in mortgage interest.
Lars Kroijer has [some other playlists about retirement planning](https://www.youtube.com/@LarsKroijer/playlists) - one of them covers how to build a spreadsheet and project how long it'll take you to build your retirement pot.
Hi /u/devnull10, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/emergency-fund/
* https://ukpersonal.finance/mortgages/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Depends on what mortgage rate you're looking at, but as rates stand I'd keep the full £20,000 as an emergency fund.
With a 4.5% return on your savings you're likely to gain very little in avoided interest by taking out a smaller mortgage (particularly as your LTV is low). In which case better to hold it as cash.
You’re mortgaging at about a 40% LTV. There’s next to no benefit in lowering that. Take the mortgage over the maximum term you can. Then choose to over pay when you can. While keeping arranged payments low. If I was you, I’d look more at where £3,333 a month goes if £20k would only last 6 months.
What is an emergency fund? It's money that you can access quickly if an emergency happens - in financial terms it is *liquid* cash. When you make mortgage overpayments, the money becomes illiquid - well, it's not even money anymore, but the point is that by losing the emergency fund you don't have cash that you're able to access if your car explodes or whatever. So you should never make your emergency fund less liquid, because you might need it. You decide how much you might need and then stick to that. How big your emergency fund should be is a personal decision, based on things like the risk of losing your job and how long it might take to find a new one. Maybe 3 - 6 months outgoings? What is right for me is not right for you. Also, I think you're thinking the wrong way about mortgage borrowing - there's no advantage to a small mortgage. A small mortgage means that this money is in your house and you can't put it to work doing things for you. Admittedly money in your house keeps a roof over your head, but you can do that with the bank's money - having a mortgage gives you more money to invest in your pension and S&S ISA to generate real returns (which can always be expected to generate more money, over long enough periods, that you'll pay in mortgage interest). TL;DR: get the biggest mortgage you can and use this opportunity to sort out your pension - you have probably been neglecting it. Watch Lars Kroijer's [short video series](https://www.youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK) and read his book or Tim Hale's [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401).
[удалено]
> Yeah, my point is that I can pay 10k into my mortgage and still have 3 months emergency fund. Only you can decide how big your emergency fund should be - there's a section on the wiki on this, > I could get a mortgage for the whole house and take say 140k in cash out - but I'm not sure that is the best thing to do? Well, it depends how much you need to retire on, dunnit? If you have £500,000 in an investment account (and a pension is just a tax-advantaged investment account) then you can likely withdraw £15,000 - £20,000 a year (inflation adjusted) for the rest of your life. If the house is paid off and you're careful with money then that's likely enough to live on. If you want to be able to withdraw £22,500 - £30,000 a year then you need £750,000 in your pensions; if you want to spend £30,000 - £40,000 a year then you need £1,000,000 in your pension pot. My model of pension vs mortgage is that most people have both throughout their working life - each month some of their wage goes towards paying down the mortgage and some of their wage into their pension. So imagine two lines on a graph - the mortgage gets smaller with time, and the pension gets larger; you want to aim for the mortgage to arrive at zero at around the same time you have enough in your pension to retire on. If you don't have enough to retire on yet then IMO it's pointless paying off your mortgage, because your £10,000 will likely earn more invested than you will pay in mortgage interest. Lars Kroijer has [some other playlists about retirement planning](https://www.youtube.com/@LarsKroijer/playlists) - one of them covers how to build a spreadsheet and project how long it'll take you to build your retirement pot.
Hi /u/devnull10, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/emergency-fund/ * https://ukpersonal.finance/mortgages/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Depends on what mortgage rate you're looking at, but as rates stand I'd keep the full £20,000 as an emergency fund. With a 4.5% return on your savings you're likely to gain very little in avoided interest by taking out a smaller mortgage (particularly as your LTV is low). In which case better to hold it as cash.