First time buyers advice

carrotman

Hi, my partner and I are looking to purchase a property in the region of £170000 -£180000. We currently have £20000 as a deposit are we likely to A) get a mortgage offer based on these figures? get a reasonable rate of interest?

Also this current deposit figure is based on paying off an outstanding loan, if we where to keep that loan going we would be able to raise more capital for the deposit, would we be better off keeping this going to raise the extra capital or is that likely to influence are chances of getting the mortgage?

Any advice would be greatly appreciated

Andy

clearing_out_my_pockets

In answer to your first question, to get the better rates you need at least a 15% deposit. You also make no mention of how you intend to pay legal fees, buy furniture, etc. Is this included in the £20k?

carrotman

Hi thanks for the quick reply, the £20000 is pure deposit, we already have furniture from our current property and have enough set aside for legal fees.

clearing_out_my_pockets

Ok. Based on a property value of £170k, you'll have just under a 12% deposit. If the purchase price is £180k, your deposit is 11%. As I say, many lenders want at least 15% and to get a better rate they want 20%.

You also need to factor in any alterations / repairs etc that the house may need which you won't necessarily know about until you've found a house you like.

By the way, I don't know the answer to your second question, but I suspect it depends on how long there is to run. My OH & I are in a similar position; his loan is paid up in August next year but we aim to pay it early. The mortgage advisor at Britannia said that as there would be less than a year by the time we move, it wouldn't make much difference. The reason we are paying it early is that the extra £400 a month will come in handy for mortgage payments!