5% versus Higher Deposit - Pros and Cons?

braj

We are first time buyers and have saved enough for a 5% deposit on a property but potentially could have saved 10% in a years time. We are currently renting. I am early 40s and my husband turns 50 at the end of this year (he is the main earner). Is there any advice re weighing up age/rent/current government initiatives (5% mortgages and stamp duty exemption) v lower mortgages rates with higher deposit? Thanks

K_S

@braj Without segregating into pros and cons, here are a few quick thoughts -

- Your husband's age will be the limiting factor from a maximum term point of view. This could have an impact on how much you can afford (as per lender calcs) to borrow. If that is the case then the later you leave it, the higher the potential impact of that aspect.

- 95% underwriting is very strict at present. So if your credit history is poor or you have excessive debt, etc, it may be difficult to get one.

- The FTB stamp duty exemption is unlikely to reduce so that shouldn't be a significant factor.

- House price movements are an unknown. They may go up/down or not move. That would (in hindsight) either please/displease you whatever decision you take.

getmore4less

A rough indicator of what it costs going in at  95% over a 90%
The difference in rate between a 95% and a 90% mortgage is around 0.5%(some lenders a bit more, not many less)

using 4% and 3.5% on 20y full term  5y fix

Finding that 5% extra deposit will save about 3.3% of the purchase price in interest over the first 5years
if you are very close to the extra 5% that saving drops to around 2.4%