FTB: Big deposit, thoughts?

Supreme_2

I have approx £70k deposit, earn £32k and am looking for a house this year. I have been renting too long, and it makes sense to get this sorted soon if i can.

Looking around it seems as though £130k mortgage might be possible, with rates at approx 3.59% over 5yrs. I think a 30yr mortgage makes more sense than 25yrs for the first property (if only to free up extra cash each month for the inevitable first home purchases). I would overpay each month, and the repayments are virtually the same as the rent i've been paying for 4yrs.

I will probably have a quick chat with the bank to get more of an idea on what i can realistically get, but will go elsewhere for real advice after!

Can anyone see any issues, or have any thoughts on this?


Thanks

ACG

I would say more like £120k plus your deposit as a purchase price as a maximum.

bigadaj

Do you really need to borrow that much, just because a bank will lend it to you doesn't mean you have to stretch yourself. It also makes little sense to extend the mortgage over thirty years, if possible find a cheaper property and keep back some money for your necessary expenditure.

Supreme_2

I have other funds for house work and savings.

property.advert

What makes even more sense is an interest only mortgage and not a repayment mortgage.

Why borrow more ? because on a longer term fixed rate the cost is pretty negligible and I would think that house price inflation could easily outstrip the 3.19% that Chelsea are offering for 70% LTVs fixed over 5 years !

Supreme_2

property.advert wrote: »

What makes even more sense is an interest only mortgage and not a repayment mortgage.

Why borrow more ? because on a longer term fixed rate the cost is pretty negligible and I would think that house price inflation could easily outstrip the 3.19% that Chelsea are offering for 70% LTVs fixed over 5 years !

I won't be going interest only.

shortchanged_2

Supreme wrote: »

I won't be going interest only.

Nice one, you know it makes sense.

ViolaLass

Supreme wrote: »

I have other funds for house work and savings.

So why do you need to have a 30 year term so free money up for house things? It makes even less sense when you say you plan to overpay.

Supreme_2

ViolaLass wrote: »

So why do you need to have a 30 year term so free money up for house things? It makes even less sense when you say you plan to overpay.

Because it gives flexibility. Flexibility is good for a first home surely?


Would it be sensible to look at properties between £180k and £240k (especially if they look overpriced), with a view to finding somewhere at an absolute max of £210k?

ViolaLass

Supreme wrote: »

Because it gives flexibility. Flexibility is good for a first home surely?

You need to check whether there are any limits or penalties for repaying.