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Is it worth stretching to hit lower LTV benchmark?

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I am £5,000 away from hitting the 75% LTV benchmark (putting down £100,000 for £420,000). Would you stretch to £105,000 deposit which would give me a 75% LTV rather than just over 76%?

Looking at the interest rates (Barclays), the interest rate will be 2.25% if I put down £100k but 1.84% if I put down £105k, but the extra £5k will stretch my finances - I currently have £106,000 and can save £3,000 a month and would probably exchange/complete in 8-10 weeks (no chain).

thoughts?

Comments

  • ACG
    ACG Posts: 24,551 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Is there any reason why you have limited yourself to Barclays? 
    .4% difference seems like quite a lot. Are you sure you are comparing like for like (ie fees/cashback/incentives)?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Sibbers123
    Sibbers123 Posts: 324 Forumite
    Fourth Anniversary 100 Posts
    edited 31 August 2020 at 9:08AM
    Looking at it, the 5 yr fixed ‘great escape’ is 1.84% with no fees (75% loan to value) and the 80% LTV has fees of £999.... (can’t use the the ‘great escape’ mortgage at 80% LTV as mortgage exceeds £250k).

    I haven’t limited myself to Barclays, I have DIP with Clydesdale as well and have a broker. I am slightly limited with lenders (5 to 6) as I will be applying for 5x annual salary (mortgage for professionals - chartered accountant). 

    The difference in rates for Clydesdale is less between 75% and 80% LTV.

    would you not recommend Barclays?
  • ACG
    ACG Posts: 24,551 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    I hate Barclays with a passion, I would rather turn business away than submit a case to them. But that wasnt the reason for the question, it was more to understand if you were limited or if you were comparing the market as the 0.4% seemed like a big jump. 

    What you have said make the 80% product sound even worse. Not only is it .4% higher but it is also a grand more in fees. 

    I think you need to compare all of the lenders products - look at the best 75% product and the best 80% product (taking into account any fees, not just the rate) and then you can make a fair comparison and decide whether it is worth getting to 75% or not. Barlcays (or any lender) may only want 75% or under mortgages so price competitively for that business but then badly for anything over 75%. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thank you! The only issue is the additional £5,000 will leave me with very little cash left. I’ll have enough to pay mortgage fees, solicitor fees but not much else! So I will have to compare the 5 year saving to see if it is worth it.
  • Just looked at Halifax, difference is 1.91% vs 1.94% - so in this case the answer is probably no.  

    Keep the spare cash.  With some much disposable income other factors like overpayment facility are more important that just the pure lending rates.


  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 1 September 2020 at 8:31AM
    Can you extend the term to get the initial payments down to rebuild some savings faster £315k 1.84%
    if you can save £3kpm now wont take long to rebuild £5k even on a 20y term
    20 £1,570
    25 £1,310
    30 £1,140
    40 £930

    That 1.84% rate with no fees  on £315k   ( using 25y term £1311pm)
    A £999 fee product needs to be 1.768% or better

    Seeing rates as low as 1.6% they would cover costs up to £3,344
    But if your 5* criteria don't match that's no good.

    Looking at Clydesdale your 5 year options seem to be.
    75% 1.80% £999, 1.82% £0  (no fee better ~£800)
    80% 1.83% £999, 2.15% £0 (fee better  ~ £4k)

    Still better to be going with the 75% LTV no fee option but the great escape should be no cost at all will there be other fees  with Clydesdale?

    As a Barclays customer they have been good over the 20+ years we have used them.

    Edit: 
    Forgot to take into account the £400 cashback on the great escape  
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