Saving for larger deposit costing more, then higher interest rate.

sk89dominik

Hi all,
Me and my wife are looking for our first home. Currently we are 2/3 towards 10% deposit and thinking ,if its worth saving for longer to get our 10% and receive lower mortgage rates. We are renting our current home and when I done my calculation to get towards our 10% we need to keep saving for next 6-10 months. If it only takes another 6 months, which is very optimistic time scale and bare minimum, our rent will already exceed the amount we would paid over 2 year fixed period at higher interest rates with only 5% deposit. The way I understand we are better off taking the mortgage with only 5% deposit and pay higher rates for 2 years and re-mortgage after 2 years with extra deposit and less money to repay. Am i right? Or there is something I don't understand and actually saving for a bit longer would still be cheaper? Any advise would be highly appreciated.
Many thanks  

steampowered

If you can afford the property you are want and are confident that you will be in that property for some time, personally I would just go ahead and buy. 

You can take a 2 year fix and remortgage onto a lower rate when it comes to an end.

It can take 6-10 months to find a property you like, have an offer accepted and go through the conveyancing process, so if you start now you might have a 10% deposit by the time you buy anyway !

diggingdude

I would buy, but only if my job didn't involve working in a restaurant, airline etc at the moment with the risks of redundancy and small deposit

dimbo61

There are some great deals with a 10% deposit. NatWest have a 5 year fix at 2.23% for example so keep saving every penny you can and start looking at properties in your price range.
Could you get help from Family ?
Not many events going on at the moment, and pubs/bars/ restaurants are Very quiet so save save save