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How much to borrow on mortgage

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Hi all, requesting a little advice regarding how much we should ask for for our mortgage. 

We have sold to first time buyers and are buying a new build which should be ready in ‘the summer’. We need a mortgage of about 50k, we’re consciously trying to get the smallest mortgage we can. 

Is it crazy to try to work out that currently our mortgage, cards and loan reduce by around £650 per month, in addition we could save around £500 per month, multiply this by 3 or 4 months (maybe the time it takes to build the house) and so anticipate that we might need considerably less? 

The way we view it is that a few grand difference is quite a chunk of a 50k mortgage.

The only downside I see is we don’t save enough so are short on completion, but does anyone see anything I’m missing? Otherwise, we ask for the 50k, there will be money left over on completion, we pay this straight back into the mortgage - can we do this?

Thanks if anyone has any thoughts.

Comments

  • RedFraggle
    RedFraggle Posts: 1,407 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Your mortgage terms will dictate how much you can repay without incurring penalties. Even though it is the worse long term option I would always prefer to over borrow within affordable limits to maintain a safety net of savings but everyone is different. 
    Officially in a clique of idiots
  • It's usually 10% (of balance) annual limit on overpayments with most lenders - but terms can vary so definitely check. 
    If it were me, I'd probably feel safer keeping the savings healthier and take the slightly larger mortgage, just because there is always some unexpected cost rearing its head. If you take a mortgage of £50k and overpay the first year by £5k, that'll make a huge difference and mean you're not unexpectedly left short of ready cash if something does happen. Presumably you're planning on paying down the mortage as quickly as possible anyway rather than having a long term? 


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