Deposit or No deposit?

the_gardener

I need help and was wondering what most people would do?

I am buying a newbuildhomebuy flat that has been dropped in price by £30000.

I am buying 35% of the property for £63000.
I have been offered a 100% mortgage for 35 years capped at 6.9% for 5 years at £402 a month.I could put a deposit of £7000 down and get the repayments down to £360 a month over 35 years again capped at the above rate.

I only have £12000 grand to pay out for deposit and legal fees and such like, so would rather the money in the bank earning a small amount of interest.
I am leaning towards the 0% deposit down as it leaves me a nice chunk in the bank. Is this the right decision you would take?

tootiefrooties

I would be inclined to keep the deposit back as savings - it's a lot more reassuring to have 7k in the bank for emergencies than it is to know you will have an extra £40 a month for emergencies! (crises don't tend to hang around for when your monthly budget is ready)

By getting a part-ownership you've reduced mortgage payments loads anyway, so I wouldn't chuck in a lump sum to make such a small difference. You never know - you might need it for furnishings, repairs or something.

...Although, I am sure plenty of people will tell you to put it as a deposit, because everybody these days think you should have tens of thousands to put down, and then only borrow a low LTV. great in principle, but not right for everybody. I'd be over the moon to be in a position where I don't need a deposit, so my advice is to make the most of it and earn some interest on it.

Good luck with the move!

continualdiamond

Obviously the choice is yours, only you can decide what is best for your life situation.

For myself and my OH we bought 2 years ago and got a 100% mortgage fixed for 5 years at 6.1%. We basically decided that this was the best option for us and we bought within our means, basically got a mortgage for the same amount per mth as we were paying in rent.

hostman

Er?

100% mortgage? Which lender?

Sounds to me as if the house builder will be "gifting" you a deposit. It won't be a 100% mortgage, they were all withdrawn earlier in the year.

geoffky

35 years being a slave to the banks...you must be mad

Calchas

geoffky wrote: »

35 years being a slave to the banks...you must be mad

Presumably most of your other 557 posts are slightly more edifying

tootiefrooties

hostman wrote: »

Er?

100% mortgage? Which lender?

Sounds to me as if the house builder will be "gifting" you a deposit. It won't be a 100% mortgage, they were all withdrawn earlier in the year.

The OP said they are buying a 35% share of the house, so I think they mean they are getting a mortgage for the full amount they are buying (technically a 35% mortgage, not 100% mortgage).