I am buying my first property and have a choice between getting a 100% mortgage or a 92% mortgage. Is it true that money is cheap and i should just take the 100% use my savings to decorate and put extra money into the mortage when i can or am i better to take a 92% mortgage?
mortgage advice
- Thread starter ailm
- Start date
Wouldnt it be better to get a cheaper rate mortgage and pay it all off sooner? I think the key for mortgages should be 'the sooner the better'. Decorating your house shouldnt be your priority. Sleepin gon a beanbag might not be the most comfortable but you will appreciate your possessions alot more the harder you have to work for them.
By going with the 92% you should be able to reduce the % on the mortgage, the term of the mortgage (hence the ammount of interest will drop further) and accordingly your life assurance payments will be less.
The current mortgage rates (including the forthcoming expected ECB hikes) mean that the money isn't exactly "cheap" [previous years mortgage costs were described as negative interest]
The only real way for you to know is to crunch all the relevant numbers. It really depends on the 100% rate and 92% rates on offer and the need for your extra savings to go into the house.
Some of the many mortgage calculators available should help you get a feel for the true lifetime costs of the two mortgages on offer. (e.g. http://www.askaboutmoney.com/showthread.php?t=26335&highlight=jeacle )
The current mortgage rates (including the forthcoming expected ECB hikes) mean that the money isn't exactly "cheap" [previous years mortgage costs were described as negative interest]
The only real way for you to know is to crunch all the relevant numbers. It really depends on the 100% rate and 92% rates on offer and the need for your extra savings to go into the house.
Some of the many mortgage calculators available should help you get a feel for the true lifetime costs of the two mortgages on offer. (e.g. http://www.askaboutmoney.com/showthread.php?t=26335&highlight=jeacle )
While I agree decorating the house isn't a priority, you will need money for some things like solicitor's fees and building insurance etc. There will also be essentials that you'll need - things like flooring in new builds or kitchen appliances or a security system. What you view as necessities depends on you. Some people can't survive without a decent bed. Others don't mind the beanbag. 
I don't mean that you should blow thousands on the most expensive things out there but there are some things that are necessities! If ALL your savings will be swallowed up by the 8%, then you may find if extremely difficult for the first year to make your mortgage payments AND get these essential items. However, I really don't think your necessities should add up to around 8% of the purchase price of a house!
Maybe you could get a 98% mortgage or negotiate payment holidays at the start of the mortgage? That could free up some of your savings without having too bad an impact on your mortgage term or interest.
I don't mean that you should blow thousands on the most expensive things out there but there are some things that are necessities! If ALL your savings will be swallowed up by the 8%, then you may find if extremely difficult for the first year to make your mortgage payments AND get these essential items. However, I really don't think your necessities should add up to around 8% of the purchase price of a house!
Maybe you could get a 98% mortgage or negotiate payment holidays at the start of the mortgage? That could free up some of your savings without having too bad an impact on your mortgage term or interest.