Offered accepted how much deposit to pay?

KaAsChEl

Hi

We have had an offer accepted on a property for £130,000.
We have £20,000 for deposit and fees. We will put a minimum of £13,000 10% down. Is it worth putting down £16,000 and leaving £4000 for fees and moving or should we just put the £13,000.
Any advice would be welcome!

G_M

10% is normal at Exchange although a lower amount can often be agreed.

Why would you want to put a higher deposit down? What benefit do you think you will get?

KaAsChEl

So the amount of money we borrowing for the house is less. The payments are slightly lower each month.

G_M

The deposit you pay at Exchange is totally unrelated to the amount you are borrowing.

The word 'deposit' , confusingly, has 2 different meanings:

1) 10% (deposit) of purchase price paid at Exchange (the remaining 90% paid at Completion)

2) X% (deposit) of purchase price you are paying from your own savings (the remaining Y% coming from a mortgage lender)

SG27

KaAsChEl wrote: »

So the amount of money we borrowing for the house is less. The payments are slightly lower each month.

That will save several thousand in interest over the term of the mortgage too.

KaAsChEl

SG27 wrote: »

That will save several thousand in interest over the term of the mortgage too.

Sorry I am slightly confused I was referring to the mortgage, so would it be better to put down £16,000 saving money in the long run and borrowing less?
With reference to paying 10% at exchange who would pay that?
Obviously I know the money would come from us but if we put down £16,000 would be an approx 12% deposit. Would they use that? Is the deposit paid to the solicitor?
Sorry this is the first time we have done this.
Thanks

G_M

KaAsChEl wrote: »

Sorry I am slightly confused I was referring to the mortgage,would have helped if that had been clear! so would it be better to put down £16,000 saving money in the long run and borrowing less?
of course. Borrowing is expensive - you pay interest (extra money) continuously for 25 (or so) years! Borrow less, pay less interest!

With reference to paying 10% at exchange who would pay that?You
Obviously I know the money would come from us
Correct
but if we put down £16,000 would be an approx 12% deposit.
you pay 10% at Exchange and the rest at Completion (see my post above)
Would they use that?
who is 'they'?
Is the deposit paid to the solicitor? All money goes via your solicitor.
Sorry this is the first time we have done this.
Thanks

Go to the local library and borrow (free) a book on house buying.

It will answer these, and 100 other questions.

HarryBarry

KaAsChEl wrote: »

Hi

We have had an offer accepted on a property for £130,000.
We have £20,000 for deposit and fees. We will put a minimum of £13,000 10% down. Is it worth putting down £16,000 and leaving £4000 for fees and moving or should we just put the £13,000.
Any advice would be welcome!

Ok I'm reading this as just a simple 'how much to borrow' question and not asking anything else about the house buying process...

...in which case in your situation I would only put 10% deposit (£13000) and use £4000 for fees and keep the £3000 back for emergencies (unless you have more savings that you were planning to keep back).

Even though borrowing 117k instead of 114k will add an extra £15 a month to repayments and cost you more in interest, mentally you will feel better knowing that if you suddenly have a need to pay an unexpected bill, the money is there for it.

I'd play it safe to start with and then after a year if you haven't had to touch the money and been able to save up a bit more cash, you can look at making an overpayment.

But if you can afford to put down 16k and still have backup money, then generally I would go for that as it will save money in the long run (as will over paying). All depends what you are left with after your house purchase is complete really.

SG27

KaAsChEl wrote: »

Sorry I am slightly confused I was referring to the mortgage, so would it be better to put down £16,000 saving money in the long run and borrowing less?
With reference to paying 10% at exchange who would pay that?
Obviously I know the money would come from us but if we put down £16,000 would be an approx 12% deposit. Would they use that? Is the deposit paid to the solicitor?
Sorry this is the first time we have done this.
Thanks

You pay all your money to the solicitor. On exchange the solicitor will transfer 10% of the purchase price to the vendor. If you are only putting down a 10% deposit then all of this will be paid on exchange. On completion your solicitor will get the reminder of the purchase price from the mortgage lender and pay this to the vendor.

kingstreet

I would scrape a few more quid together between application and completion to cover the fees and put down £19,500 so you get an 85% mortgage with a better rate than at 90%. You'll then save on both the amount you borrow and the rate for the next 25 or more years...

For example;-

90% £117,000 mortgage at 3.99% over 25 year term = £616.92

85% £110,500 mortgage at 2.99% over 25 year term = £523.43

If you then take the £93 per month saving and use it as an overpayment, you could repay the mortgage 5 years and 3 months earlier.

You're welcome.