Pay Mortgage product fees or deposit - thoughts?

Legacy_user

Hi,

With house prices being so high compared to the deposits that people can put together, it seems to be worth reducing your deposit and using as much as possible for mortgage product fees, so you can get the best rate possible for your circumstances.

Fees seem to be up to £1800 which is a lot less than the deposits required these days and it seems to me to be a better option than putting it into a deposit.

Thoughts?
Jason

amnblog

Bit baffled how you work this one out Jason?


Are you saying you are better off paying interest on an extra £1,800 by taking it off of your deposit to pay a lender's fee?

Let_Us_See

I think he means is it best to pay a higher lender's arrangement fee to obtain a lower rate of interest. If so, a minute or so with a calculator will give you the answer.

TBagpuss

It depends on what the interest rate is.
If you pay £2,000 in fees, then you presumably will be borrowing £2,000 more than you would otherwise be borrowing, as you will not be using that money as part of your deposit.

So - how much will borrowing the extra £2,000 cost over the life of the mortgage?
How much will you save by getting the better rate (bear in mind that the better rate may only be for the initial fixed period)

Which is higher?