Don't know how much to put down!

CrippsCorner

Hi this is my first post here. I feel a bit sick with worrying about what to do so thought I'd ask for advice here.

I'd always had it in my head that I wanted to hit the 20% deposit mark, and that's what I said at my first meeting with my broker. However after going away and looking at the fees etc. it turns out I'm going to be living very close to the line... in fact I don't actually have enough money right this second (about £1,500-£2,000 out) so I'd be relying on the coming months pay to get everything paid off.

It means I'd literally have nothing left in the bank.

When we met up again I started talking about dropping the deposit to 15% which means after fees etc. I'll have about £7,500 left in the bank. I should add me and the missus have our first baby on the way and haven't bought anything yet. This started making sense to me as I could buy stuff for the baby and decorate and have a little break away which we need before it's due (not had a holiday in almost two years)

But then there is the fact over the term we'd be paying £20,000-£30,000 more interest (depending on 25/30 years)

tl;dr do I struggle for a while without back up money to get a better rate. Or suck it up and live a bit easier but end up paying a lot more in the long run?

HappyMJ

I would put as much as you possibly can down for the deposit.

As you say you'll be left with no cash so use the credit cards for the first few months to buy essentials with and as soon as you're paid next pay off the credit cards. If you manage it well you won't pay any interest and after a year you'll have an emergency fund saved again.

So my option would be to struggle for a while as it'll save you some £25,000 over the term of the mortgage which is quite a lot of money. You won't need to struggle for long you just need to wait a few months and you'll be back on track.

ACG

Forget the term of the Mortgage how much extra it will cost you. If you make a plan now and you stick to that plan 100% over the next 2-3 decades I would be very surprised.

You do not have to put down amounts in 5% values. You could put down a 17% deposit if you wanted, or 18.246%. So that may mean you are not exactly a million miles out, albeit you are paying a slightly higher rate for the 2 years.

Westminster

I'm sure you have allowed for this so please disregard if that is the case - but have you budgeted for legals / stamp duty / removals etc etc?

Filo25

I had much the same dilemma myself, in the end chose to go for the lower LTV with all of the interest savings that brings, even at the cost of making things pretty tight for the first year.

Still short of the total amount we need for fees + deposit as well but when we put the offer in, we stated it was dependant on us only completing after the end of March for financial reasons, vendor was fine with that.

nkkingston

If it's going to put you in dire financial straits with a baby on the way, I'd say pay what's affordable now, and get a mortgage you can overpay to bring the term down (and remember, you can always remortgage later). Expecting everything to go exactly to plan when you're buying a house, having a baby, or living on a financial knife edge, is unlikely enough without trying to do all three at once. One broken washing machine when the baby-sick covered clothes are piling up and the whole house of cards come crashing down.

CrippsCorner

Westminster wrote: »

I'm sure you have allowed for this so please disregard if that is the case - but have you budgeted for legals / stamp duty / removals etc etc?

Yes the prices above are inclusive of everything. In fact, we don't need removals at least as we're buying the place we've been renting lol (just for a year)

Thanks for the advice so far. Never thought about the CC thing I guess, as I've never had one before. I know the girlfriend has though so will speak it over with her I think.

amnblog

Cash is king. But babies are expensive.

I would say if you can afford and obtain the mortgage with the smaller deposit it may be better to keep the cash buffer back.

Speak to your broker.

elverson

More generally, remember you don't have to buy all the baby stuff brand new - there's plenty of free and second hand stuff available as babies become toddlers and parents get rid of things.

CrippsCorner

amnblog wrote: »

Cash is king. But babies are expensive.

I would say if you can afford and obtain the mortgage with the smaller deposit it may be better to keep the cash buffer back.

Speak to your broker.

We definitely can, and actually, looking at the numbers... over 30 years, the smaller deposit only works out about £6,750 more. That's just over £500 per year which I doubt we'll notice!

Missus seems to want the spare money in the bank.

amnblog

It is very rare we have an applicant that goes against the wishes of his wife.