Loan for Mortgage deposit or 100%?

In message , Ric writes

Your academic qualification is irrelevant with regard to your ability to get a 100% mortgage. Your credit record is more important.

Unlikely. 100% mortgages are generally cheaper than loans and you can spread the payments over 25 years rather than 5(say). Also the higher capital payments on the loan will restrict your borrowing ability.

This is what is more likely to restrict your ability to get 100% because it restricts your available income.

Its worth getting the credit card debt on to a cheaper rate, but not the house deposit.

Go to a broker and he will likely show you a >100% mortgage of the likes offered by Northern Rock who have schemes that go as far as 125%.

However, the lower the mortgage loan-to-value the lower the MIG.

Rob Graham

This was what I thought. Say we buy an 80,000 house but get a mortgage that is over 100% in order to pay off my debts too then we would end up paying 84,000 over 25 years with a high MIG. If, on the other hand, we borrow 8,000 over 3 years and used 4000 to pay off my debts and 4000 as a deposit then we would end up paying only 76,000 over 25 years whilst the deposit and all of my previous debt would be wiped out in three years. The MIG would also be a lot lower. This would surely save us lots of money?

In message , Ric writes

Borrow the full amount form Northern rock (say)_ and over pay for a bit, or take a shorter term, you must be able to afford the higher payments if you can pay £8k x 3 years. The £8k loan will reduce your maximum mortgage by at least £10k.

You'd need the exact figures to be able to work it out. Look for a 100% mortgage that appeals to you and see what the MIG is and work out how much interest you'd pay on your loan. Then look at a mortgage assuming you're putting in 4,000 and see what the MIG is and work out the relevant interest savings/increases.

The same lender may not be the best in both circumstances.

Rob Graham

In message , Ric writes

Just checked, Northern Rock dont charge a MIG on their 'together' 125% mortgage, and only 95% is secured anyway, the rest is an unsecured loan at the same rate which you can over-pay so it has the same effect as borrowing elsewhere.

Okay, fair point, I was just wondering if anyone would say one way was definately better than the other without me having to sit down with a calculator! Just one more question if I may. I have a lump sum due to me soon in the region of 5,000 - do you think it would it be best to a) clear all my debt immediately with said money or b) use the 5,000 as a deposit and continue to pay my debts off over time? Obviously I would love to wipe out my debts right now but I would be gutted if I did and then found that we would lose out in the long run because we would then have to get a 100% mortgage. Again I realise that I will probably have to sit down and do the figures but I was wondering if you had any opinion on the matter.

Thanks again, Ric.

Without knowing the figures who can say?

Just one more question if I may. I have a lump sum due to me

No opinion without the figures.

Rob

My first thought would be about where you're getting the solicitor's fees, stamp duty, etc. Bear in mind that's a few quid more on top of your purchase price. You'd be looking at 800 stamp duty, about 600 solicitors' fees, and other bits'n'bobs that are completely escaping my mind ATM. Don't figure on any change from 1500.

Cheers, Andy