Very quick basic mortgage question

latro666

Hi there, just joined the forum so hello!

To be short and sweet i'm really confused about this whole mortgage thing, i may be looking to buy and from what i can see it is just glorified renting with a huge desposit.

My main question is though with interest and what you actually pay back. For example:

100,000k property though HSBC calculator picking the same mortgage over
30 years one with:
25,000 deposit, one with 50,000

25k
2 Year Fixed Special 90% 3.64% 3.94% 4.0% APR £999
£343pm
£123,480 total (343*360)
£148,480 (total + deposit)

50k
2 Year Fixed Special 90% 3.64% 3.94% 4.0% APR £999
£228pm
£82,080 total (228*360)
£132,080 (total + deposit)


So as i'd expect you pay less with more of a desposit over the course of the 30 years but when you add your original desposit back on the difference is pityful...

Why would you bother in this case putting down 25k more when you only seem to save £16k... surely your better off keeing the 25k in the bank for 30 years gaining interest and taking the mortgage out on the 25k...?

I'm pretty sure i must be missing a vital number here or i'm not understanding something? All the advise online appears to be geared towards short term advise and i'm more of a long term thinker.

cheers

wow, became longer than i expected! apologies the whole mortgage thing is a bit odd.

TrickyDicky101

So putting down a 50k deposit vs a 25k deposit saves you 16k ish of interest over the term. Doesn't sound pitiful to me.

EDIT: you are neglecting to take into account the additional £114 ish per month that you have over the 30 years which you can do with as you want eg invest in a savings account (thus earning interest), spend on fast cars, beer etc - or, alternatively, you could waste this money

latro666

Its getting my head around paying twice the deposit in relation to what you actually save... it seems pointless in my situation to bother saving anymore that 25k... I guess that's the crux of it.

I expect the end of the story of it though is that interest rates will rise eventually so the more capital that is still unpaid will be liable for interest so those two monthly figures will begin to widen dependent on how much you pumped in to start with.

e.g. lessening the inevitable interest a-bomb.