Advice needed on comparing two mortgages

diamondfreddie12

Hi, can you guys help me?

We applied for a mortgage with Newcastle and were offered 3.99% fixed for 5 years. However, they valued our house less than we were expecting so we fall short of the 75% max lending amount by £3,000.

We have since looked around and have found the next best option 4.99% fixed for 5 years at 80%.

What do you suggest we do? Should we go for the 3.99% and borrow the outstanding £3k from other places (I'm thinking of 0% credit card) or should we just go for the 4.99%?

We need to borrow £145,000 and also have £5k debt on credit cards which will be paid off by the end of the year.

Thanks in advance for all your help!

somethingcorporate

The lower rate on the lower balance is obviously the logical choice based on 2 assumptions:

1) You can put it on a 0% credit card
2) You can pay off this credit card without incurring any interest (i.e within 12 months).

If you can do these 2 things then it is much better (to the tune of a few £000) to go for the lower rate. If you cannot and get whacked by 15-20-25% interest on the credit card debt then it becomes a different debate.

Wh05apk

The 1% difference will cost you about £1400pa, or £7k over 5 years, "finding" £3,000 to save you £7,000 seems to make good sense?

GMS

How will you get £3,000 for the deposit from a credit card?

If you take a cash advance the rate would almost certainly not be 0% and if you attempt to pay the 3k with the card the solicitor would need to tell the lender that the deposit was a loan which may affect the application.

getmore4less

Ballance transfer on CC 0% interest but a fee typicaly 3%-5%.

A 0% purchase card may help with the cash flow no cost and some are longer

diamondfreddie12

Thanks for the feedback guys, just need the reassurance i'm doing the right thing...