Mortgage deposit size, what's best?!

keepsaving!

Hi everyone!

Just hoping there's a simple-ish answer to this one, but maybe not!

I've currently got about £25k for a deposit on a first flat/house, and a 3.5 - 4 x mortgage would give me and other half £180 - 210k in terms of house price. That gives me a deposit of over 10%, but I wanted to know if it's worth saving more for the actual deposit, rather than earmarking any extra funds for other costs. I had read that rates tend not to change much once you've got a 10% deposit, even if you've got as much as 50%.

Any guidance on this would be great, then I can start to plan for the inevitable extra costs!

Zammo

Deposit? Who needs deposits nowadays. Get yourself down to Northern Rock and get one of those new fangled 125% mortgages. You'll have loads of cash then to spend on 4x4's, M&S food and plastic surgery. No point in worrying about negative equity. House prices only go up you know.

Generali

keepsaving! wrote: »

Hi everyone!

Just hoping there's a simple-ish answer to this one, but maybe not!

I've currently got about £25k for a deposit on a first flat/house, and a 3.5 - 4 x mortgage would give me and other half £180 - 210k in terms of house price. That gives me a deposit of over 10%, but I wanted to know if it's worth saving more for the actual deposit, rather than earmarking any extra funds for other costs. I had read that rates tend not to change much once you've got a 10% deposit, even if you've got as much as 50%.

Any guidance on this would be great, then I can start to plan for the inevitable extra costs!

10% should be fine. I'd stick to 3.5x on the mortgage if you can as mortgage rates may rise even as base rates fall.

Running_Horse

keepsaving! wrote: »

but I wanted to know if it's worth saving more for the actual deposit, rather than earmarking any extra funds for other costs.

The other costs before and after purchase will be much more than you have budgeted for. Much more.

WTF?_2

Generali wrote: »

10% should be fine. I'd stick to 3.5x on the mortgage if you can as mortgage rates may rise even as base rates fall.

Do you know if better deals are available with substantially larger deposits? I've got quite a bit saved and despite my bearish stance now, will buy in once the market crashes. I'm anticipating a pretty low borrowing multiple when I come to buy ...

Obviously I'd like to minimise the size of my debt but I also will need to ensure some ready cash should I have a financial emergency or want to buy a new car etc. etc. so I would hold some cash in reserve rather than put it all into the initial deposit.

Finding the best balance is what I'm interested in - trading off a bigger loan for better personal liquidity (especially bearing in mind that mortgage borrowing is just about the cheapest way to borrow).

Generali

!!!!!!? wrote: »

Do you know if better deals are available with substantially larger deposits? I've got quite a bit saved and despite my bearish stance now, will buy in once the market crashes. I'm anticipating a pretty low borrowing multiple when I come to buy ...

Obviously I'd like to minimise the size of my debt but I also will need to ensure some ready cash should I have a financial emergency or want to buy a new car etc. etc. so I would hold some cash in reserve rather than put it all into the initial deposit.

Finding the best balance is what I'm interested in - trading off a bigger loan for better personal liquidity (especially bearing in mind that mortgage borrowing is just about the cheapest way to borrow).

If not now then I think that's something we can expect to see if the credit crunch continues. Banks are looking to take on less risk. One way for them to reduce the riskiness of a mortgage is to take a bigger deposit.

jonewer

I'd hazard a guess that a 100% deposit would be the best way of doing it....

Generali

jonewer wrote: »

I'd hazard a guess that a 100% deposit would be the best way of doing it....

I think that Mrs Generali agrees with you. I asked her, "what size is best?"

She replied, "The bigger the better" and started laughing. I think she's been at the sherry again.

jonewer

Generali wrote: »

I think that Mrs Generali agrees with you. I asked her, "what size is best?"

She replied, "The bigger the better" and started laughing. I think she's been at the sherry again.

Ooo-er is she a go-er? Nudge nudge wink wink...