£5500 savings - what to do with it?

ukclarkkent

slummymummyof3 wrote: »

You need to consider that a mortgage provider will take into account existing loan payments etc when they work out the affordability of a new mortgage. It is no longer as simple as 3x your earnings, unfortunately.

Alternatively, why not carry on paying the monthly amount on the loan up until the summer (keep your lump sum in savings) and then pay off the remainder in the summer - that way you will have made 8/9 more monthly payments so it won't eat into your lump sum quite as seriously but you will have also settled the loan prior to mortgage application????

yep you're right again which is why i'm asking for ideas well in advance. i probably won't do anything between now and chrimbo which is another 2-3 months loan payments. then i'll try and get a plan for next year in january and stick to it.

looks like i'll try to save my lump sum as best i can until late spring and then see what the current lending criteria is at the time.

thanks again.

ViolaLass

Thrugelmir wrote: »

On exchange of contracts on the purchase of a new property it is standard practice for a 10% deposit to be put down.

So by cash I mean available liquid funds.

So what do people do if they haven't sold yet and only have, say, 6 months living money available as they've been throwing the rest at the mortgage? (I don't mean that in an outraged way, I'm genuinely curious having never heard this before).

g_attrill

Thrugelmir wrote: »

On exchange of contracts on the purchase of a new property it is standard practice for a 10% deposit to be put down.

So by cash I mean available liquid funds.

As far as I know you only need the cash if you are at the beginning of a chain. If you are mid-chain then the standard practice is that the first person's deposit is passed up the chain (legally, not literally) even if it works out less than the 10% at one point.

firstaspect

Thrugelmir wrote: »

On exchange of contracts on the purchase of a new property it is standard practice for a 10% deposit to be put down.

So by cash I mean available liquid funds.

If he's buying and selling then the deposit just comes up through the chain, you don't need 10% extra spare cash, you can move with just the equity from your property + the money to pay for legal fees, EA, stamp duty etc.

firstaspect

My advice would be to save as much as you can and then think about clearing the loan before looking at mortgages. Then you can go into it with no debts and hopefully some savings left to cover legal fees, EA fees etc. and use the equity from your sale to fund the new house.