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House Deposit

Discussion in 'Home and Garden' started by Ciphon, 10 Jul 2013.

  1. Ciphon

    Wise Guy

    Joined: 9 Dec 2008

    Posts: 2,341

    Location: Hampshire

    Sorry for reviving a relatively old thread - but I thought I'd close the loop on "our story".

    My partner and I were both lucky enough to have our jobs go exactly as we'd hoped in the last month, and have therefore decided not to accept her parents offer.

    We should have all of the money we need by December, so the light is well and truly at the end of the tunnel!

    Good luck to all those struggling their way to their deposit!!
  2. DiCe!


    Joined: 1 Sep 2007

    Posts: 5,416

    Well done amte, best of luck with now finding a place and making it your own!
  3. bash25


    Joined: 29 Jun 2009

    Posts: 146

    Location: London


    You should take the money from her parents, because the bigger your deposit the lower your LTV (loan to value), which means better mortgage deals in lower interest rates.

    To save paying interest overpay your mortgage and you will save money on the interest.

    I am in the middle of buying a house in London and for my mortgage deal I have gone for a lower monthly payment, which I will be overpaying by 10% (this is the maximum my bank will allow to overpay).

  4. Ciphon

    Wise Guy

    Joined: 9 Dec 2008

    Posts: 2,341

    Location: Hampshire

    Yep, I totally understand where you're coming from, and know it would give us a lower interest rate.

    However, even with the lowly 10% deposit we're aiming for we'll have more than enough left over each month to overpay a considerable amount.

    The satisfaction of having done it on our own whilst renting is too much to just give in now ;).
  5. The_Abyss


    Joined: 15 May 2007

    Posts: 12,805

    Location: Ipswich / Bodham

    Well done on getting there! It takes an increasing amount of discipline these days to really knuckle down and save.
  6. shadow_boxer


    Joined: 9 Oct 2009

    Posts: 8,818

    Location: Stoke-On-Trent

    Well done. My wife and I are in a similar boat, just need to find a house we like.
  7. pitchfork


    Joined: 21 Jan 2007

    Posts: 8,715

    Get a missus or get a better job.
  8. DiCe!


    Joined: 1 Sep 2007

    Posts: 5,416

    Start a new job Monday, the misses is a work in progress :cool:
  9. HangTime

    Man of Honour

    Joined: 25 Oct 2002

    Posts: 28,448

    Location: Hampshire

    I wouldn't disagree with that, but it still doesn't mean renting is 'urinating money up the wall'. People spend money all the time on things that aren't physical assets with saleable value in the long term (food, drink, utilities, entertainment, transport, education etc etc). Shelter is a physiological need and as such has intrinsic value. When comparing with property purchase, I'd potentially rather rent than buy in a situation where the cost of borrowing is very high. For what it's worth, the only times I've rented have been while at university and living with my dad, so I'm not anti-mortgage, I just think too many young people have this idea drummed into them from an early age that renting is always bad. It was the same for me, I was brought up that you should own your own home, my dad's house is worth around 10x what he paid for it so the housing boom will have influenced his teachings, but I think we should present a balanced view and get people to consider each situation on merit rather than dismissing some options out of hand.

    Looking here suggests there may be a significant difference depending on location - for comparison in broad terms £500 would rent you an average two bed flat in both Dundee and Huddersfield, yet buying would cost about £85k vs £150k respectively: http://www.zoopla.co.uk/press/releases/086/zoopla-reveals-top-locations-to-rent-vs-buy-in-britain/

    I think it varies a bit depending on location & property type - in some cases rent may even be higher than mortgage repayments. For my old house that was the case as it had high rental potential (studenty area, possible to market as 4 bedrooms - I was quite shocked to see the BTL investor ended up advertising it at over £1k/month given it was valued at under £150k!). However it's difficult to judge in any case because not all mortgage products are equal (i.e. varying interest rates, varying deposit levels, varying mortgage terms, varying fees etc), although I suppose people pick a baseline like "25 year term, 15% deposit, best overall deal on market under those criteria". When people ask what the mortgage repayment you are making on a house is, it largely meaningless information without also knowing the LTV and term length. My mortgage repayments are the same on my current house as they were on my old house, despite it being worth around 50% more because the LTV is much lower. Equally I could change the length of the mortgage term to be longer and thus reduce the monthly payments to a lot lower than renting a similar property would be, but that doesn't mean I'd want to.

    Being able to overpay helps but the problem is with 10% deposit you get shafted on the rate to start with - in other words an extra say £20k on the deposit up front can make far more difference than an overpayment of £20k even over a short space of time, if it means you get a more favourable package due to lower LTV.

    That said you have to make your own choices, and at least by not taking money from family there is no feeling of 'obligation' (implied or otherwise), and no arguments in future if (heaven forbid) you were to split from your partner and then the side of the family that provided the cash gets all shirty about what happens with the proceeds of the house sale etc.
    Last edited: 19 Sep 2013