Mortgage - Increase deposit but same rate

Username3456

Hi,

Basically might be purchasing a house and i'm in a situation were I could put down 30% deposit (£50,250)

When I do this Santander rate for a 3 year first time buyer with £1000 cashback is 2.24%.

However, when I change this to 20% deposit (£33,500) the rate and deal stays exactly the same. So as far as I can see I would be stupid to put the additional £16,750 upfront? I assume the only reason people might say to do this is so you don't spend / waste it cheaper monthly payments etc.

But I am very good with money and this additional would just go into my savings account at 1.5% or I could even look at a fixed 3 year (I have just seen I can get a rate of 2.4%).

Therefore besides the monthly repayments being slightly higher, this would all be capital as the interest is the same?

Of course, in 3 years time I can then access the situation and pay a lump sum off?

Thoughts?

ACG

Im not sure you would be stupid to put the extra deposit down. If the rate on the mortgage is higher than you could get in a savings account, then it still makes sense to put the extra down - although could be worth holding some back for emergencies.

Username3456

The fact that if I put down 20% or 30% the rate is staying the same doesn't it make sense to just only put 20% then?

Or only if I then put the excess in a 3 year fixed which is higher than the rate?

ACG

Sorry, I did not read all of your post initially.

If you can bang the deposit in a savings account at 2.4% then it would make sense to do that instead of putting it down on the mortgage - although you need to account for any tax which may be payable on the interest. I suppose in the grand scheme of things we are talking very little difference one way or the other so it would just be personal preference.

getmore4less

Username3456 wrote: »

Hi,

Basically might be purchasing a house and i'm in a situation were I could put down 30% deposit (£50,250)

When I do this Santander rate for a 3 year first time buyer with £1000 cashback is 2.24%.

However, when I change this to 20% deposit (£33,500) the rate and deal stays exactly the same. So as far as I can see I would be stupid to put the additional £16,750 upfront? I assume the only reason people might say to do this is so you don't spend / waste it cheaper monthly payments etc.

But I am very good with money and this additional would just go into my savings account at 1.5% or I could even look at a fixed 3 year (I have just seen I can get a rate of 2.4%).

Therefore besides the monthly repayments being slightly higher, this would all be capital as the interest is the same?

Of course, in 3 years time I can then access the situation and pay a lump sum off?

Thoughts?

I don't think you understand how mortgages and borrowing work.

if you borrow more you will be paying more interest the higher payment will not be all extra capital.

using your numbers over 25years
30% deposit
£117250 2.24% £511pm interest over 3 years £7,529
20% deposit
£134000 2.24% £584pm interest over 3 years £8,604

IF you can save at a better rate than the mortgage rate then it can be worth keeping the money back, a type of stoozing(borrow money at a lower rate than you can get elswhere)