60% LTV vs 70% LTV with overpayments

ksp830

Hello

I want to put a deposit down on a house using pretty much all of our savings (with £4,000ish spare) whilst my wife wants to keep all our savings (£30,000) and only use equity from the house sale.

Obviously the better rates are at 60% thus having a lower monthly mortgage repayment but my wife wants to keep our savings to do up the new house plus in case of emergency.

So my question is -

Over a 5 year fixed rate period, if we had the money spare and we made overpayments for every 1 of the 5 years. Would we be better off with a rate within 70% LTV or should we risk using our savings lowering our LTV to 60%?

amnblog

Do what wife says, or I wouldn't want to be you when she wants cash you don't have further down the line.

ACG

We would need the rates and the mortgage amounts.
However, if you put down the full deposit you will be paying a lower rate of interest on a smaller balance from day 1. So its unlikely the smaller deposit would be cheaper in any circumstances.

That being said, look at it monthly. How much are you talking? Having some money in the background is not necessarily a bad idea. My mortgage is quite small now, I could probably clear about a third of it if I wanted, however monthly I would be about £30 a month better. I would rather keep it in my account, I then have money for anything - a slow period in work (as I am self employed), if I want to jump on a plane somewhere or if it is needed for home improvements etc.

If you are looking at it from a purely financial perspective then you are probably going to win the argument.

ksp830

Thank you for the quick reply and yes your right obviously I should listen to what my wife says but I was also hoping for a more constructive answer.

pjcox2005

I guess there is a scenario that the difference in interest between the two ltvs is very small, and therefore the interest earned on the £30k could offset it if in a high interest account or invested.


However, practically that's probably a very limited circumstance so all others the lower LTV will give a lower total interest level.

ksp830

Thank you to all that answered, this has helped me a lot.