Which is better - larger deposit, or better credit rating?

lite_ruse

Have you considered other costs? Legal, valuation, moving, stamp duty? Those can add up...

I'd pay off at least half the debt if I were you, before you apply for the mortgage. And start saving aggressively now. Are you paying any interest on that debt?

Chocolatefund

Short answer:

Clear all debts and get %10 deposit.

How much interest is on that debt? If it's high I would personally use the deposit to pay it all off then start saving from scratch again. The money that was going on that card plus its interest you could save up that deposit again in no time.

globalnic

lite_ruse wrote: »

Have you considered other costs? Legal, valuation, moving, stamp duty? Those can add up...

I'd pay off at least half the debt if I were you, before you apply for the mortgage. And start saving aggressively now. Are you paying any interest on that debt?

Thanks for your response.
I've considered other costs involved, theyre not an issue.

Re the debt, yes still paying interest on it (though recently moved some to a 0% deal). Would you suggest using the existing savings to pay off the existing debt then? That would then suggest that the debt and credit rating would have a bigger affect on a mortgage application than a small deposit would?

globalnic

Chocolatefund wrote: »

Short answer:

Clear all debts and get %10 deposit.

I can't do both in the required timeframe, which is why I asked the original question.

Chocolatefund wrote: »

How much interest is on that debt? If it's high I would personally use the deposit to pay it all off then start saving from scratch again. The money that was going on that card plus its interest you could save up that deposit again in no time.

I'd still only have a 7% deposit if I did that, so I'm taking that to mean repaying the debt is more important than building up the deposit.

sam2015_2

globalnic wrote: »

Thanks Sam.

The question is, will paying off the debt allow me better rates/a bigger mortgage than putting the equivalent money into the deposit?

Better rate -No, higher the deposit cheaper the interest rate.
Bigger mortgage - YES absolutely. Less commitments gives you more borrowings.

If you really need deposit and would like to hold on to your savings, you could get a long term personal loan for your debt, obviously with cheaper interest as possible. Long term to keep the monthly payment low - good for the mortgage affordbility. This is not the cost effective option but might help you get on the property ladder.
Once you got the mortgage and have extra money, you could then pay off the loan or overpay mortgage/loan.

If you saved up more or find a cheaper property by the time you are applying for the mortgage,you could pay off the loan on or just before the completion.

I'm in similar situation, have loans and savings, but not a first time buyer though.

PixelPound

Get your cards to under 50% of limit, don't think lenders like of you have maxed out cards as it shoes reliance on credit - even if in reality you are just using 0% promotional offers. You might get better deal at 10% than 5% but only slightly and there isn't any different rates for in between.

Look at some affordability calculators to see how the high credit card levels effect your maximum mortgage amount and play around with how it changes of you have less CC debt, no debt, or loan debt

amnblog

There are around four times as many mortgage product options available for 10% deposit as there are on 5% deposit.


Nine times more products with 15% deposit v 5%

globalnic

sam2015 wrote: »

Better rate -No, higher the deposit cheaper the interest rate.
Bigger mortgage - YES absolutely. Less commitments gives you more borrowings.

Thanks Sam2015. This is the information I was looking for.

Thanks to all on the thread for info/opinions/advice!