What size deposit

hufc2002

Hi all

My wife and I are wanting to move house but can't decide when the best time would be to do so and what we should aim for deposit wise.

Wife earns £38k and I earn £23k so looking at houses circa £200k. First and foremost does that sound affordable?

Our current (first home) is probably currently worth approx £90k and we owe approx £80k so £10k equity. We currently have £10k in savings and saving £500 per month.

What deposit should we aim for? We want to move as early as possible but if by having a bigger deposit would save ££££ then we can stick it out a little longer.

Thanks in advance.

littlegreenfrog_2

Have you tried putting your details into any online affordability calculators? They will give you a good idea of how much you might be able to borrow.

Based on your joint income buying a property for £200,000 sounds quite realistic, but I don't know anything about your lifestyle, other financial commitments, children etc. Most online calculators will ask for these details and come up with an estimate.

I spoke to a mortgage broker when I had a 10% deposit and he told me I would get a better interest rate if I waited until I had 15%.

hufc2002

Our current mortgage is £450 per month but we have been overpaying £220 per month for the last 2-3 years.

Currently pay £389 per month for one car (PCP) and £177 for a £6k loan over 36 months.

2 children childcare covered via childcare vouchers.

littlegreenfrog_2

I'm not a mortgage adviser so you really are best off putting those details into an affordability calculator and seeing what it comes up with. Most lenders should have them on their websites. I know Nationwide does because I did it for myself earlier today.

ThePants999

Affordable? Well, that obviously depends on your other outgoings - do some budgeting. But for comparison, my lender is happy to lend me about £280K, and my salary is about the same as yours, so I'd say "very likely".

hufc2002

Current outgoings (all direct debits plus food) is circa £1260 per month.

Are we therefore being realistic aiming to purchase a £200k house?

ThePants999

I plugged your numbers into http://intermediaries.virginmoney.com/tools/affordability-calculator, to pick a random one, and it said "yes", though I had to guess some information so try it yourself.

However, bear in mind that:
- only having a 10% deposit will limit your choice of lenders and significantly jack up the interest you're paying. (Varies by lender and product, but a typical example would be a 0.5% higher rate for 90% LTV than for 85% LTV.)
- in addition to deposit, you need to save for all the other costs of buying and selling - estate agent's fees, solicitor's fees + disbursements, mortgage fees, survey, removals, stamp duty, yadda. This adds up to thousands.
- it's probably somewhat unwise to leave yourself with no savings whatsoever :-)

hufc2002

Current outgoings (all direct debits plus food) is circa £1260 per month.

Are we therefore being realistic aiming to purchase a £200k house?

ThePants999

Did you mean to repeat your previous post? :-)