How much deposit?

MickeyDaMouse

We've taken out a mortgage on a house valued at £145,000.

The amount we're borrowing is £129,500

Our mortgage advisor advised us to put the arrangement fee of £999 on to the loan.

We have our mortgage agreed but we've not been told how much we need to pay in terms of deposit etc.

The agreement states we've borrowed 129,500 and must pay a deposit of 10%desposit for our mortgage. However later on in the document it states our loan is actually £130,500 because we've put the arragement fee on top of the loan.

We have enough cash to cover either amount so it's not a problem either way, but I am curious.

Do we pay 10% of 129,500 or 10% of 130,500?

glosoli

If you are buying a house for £145,000, and you are borrowing £129,500, then the deposit you need is £15,500. The document (presumably the personal illustration), will read something like the borrowing amount is £129,500, with fees of £999 being added to the loan, making the actual borrowing £130,499. Did you have the funds to pay fees separately? Just curious as to why they recommended you add them to the balance, as they will accrue interest for many years.

MickeyDaMouse

So adding the £999 to the loan won't increase the deposit we need to pay?

I was wondering if the extra £999 on top of the loan would mean we have to then increase our deposit?

norm_

glosoli wrote: »

Did you have the funds to pay fees separately? Just curious as to why they recommended you add them to the balance, as they will accrue interest for many years.

If the mortgage falls through, you don't lose your fee.

glosoli

MickeyDaMouse wrote: »

So adding the £999 to the loan won't increase the deposit we need to pay?

I was wondering if the extra £999 on top of the loan would mean we have to then increase our deposit?

Think about it,

You give your solicitor £15,500, and the mortgage company send to your solicitor £129,500. Together this makes up £145,000 (i.e the full purchase price). The arrangement fee does not enter the equation when it comes to how much of a deposit you are putting down (in this case anyway). When the mortgage account is opened, the mortgage company will then debit a further £999 from the mortgage account, making the opening balance £130,499.

ACG

Forget the arrangement fee for now.
You are buying for £145k
You are borrowing £129.5k
Your deposit is the difference.

There is a fee for the mortgage, that has been added to the loan.