Would you dig into your savings to secure a lower mortgage offer?

[Deleted User]

Hello, 
I am a FTB in the process of organising a mortgage for my offer accepted last week (great timing, I know!)

My deposit is 74% LTV. I understand this is at a 5 year fixed rate of 4.24% with no product fees. Another offer may be available at approx. 0.75% less fixed for 7 years, but with product fees of £999. The latter is available for 60% LTV. It would mean digging into my savings to make up the additional deposit, which I am reluctant to do, but with rates as they currently are, I feel it may be worth it. My money is in investments and growth this year has been negligible (if not non-existent). I don't know what the best course of action may be, so any insights would be appreciated. Thank you.

TheAble

The key point is the lower LTV band saves you interest on the full mortgage amount. Depends on your own numbers but say £15k of savings would save you 0.75% on £200k then I'd say it's worth it as you'd need to get a 10% return on your £15k to achieve the same return (£1500/yr)

K_S

Deleted_User said:

Hello, 
I am a FTB in the process of organising a mortgage for my offer accepted last week (great timing, I know!)

My deposit is 74% LTV. I understand this is at a 5 year fixed rate of 4.24% with no product fees. Another offer may be available at approx. 0.75% less fixed for 7 years, but with product fees of £999. The latter is available for 60% LTV. It would mean digging into my savings to make up the additional deposit, which I am reluctant to do, but with rates as they currently are, I feel it may be worth it. My money is in investments and growth this year has been negligible (if not non-existent). I don't know what the best course of action may be, so any insights would be appreciated. Thank you.

@Deleted_User Out of professional interest, which lender/product is this offering a 60% LTV 7 yr fix purchase product at 3.49%?

As far as I can tell from my sourcing tool (including direct products), there don't appear to be any 60% LTV 7yr fix products below 4%. 

[Deleted User]

Hi @K_S,

It was Barclays, but they seem to have now pulled that particular product. 

london21

I will say maybe go for 5 years.

Do not put all your savings into deposit to get a better LTV if you will be left with no emergency funds.

Try to secure a rate as soon as you can as the market keeps changing and rates are increasing.