MegaSack DRAW - This year's winner is user - rgwb
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I'm about to try and get a mortgage. Do I:
a.) Use [b]ALL[/b] my savings to get as low a rate as possible?
b.) Use the minimum and pay a higher rate, but still have the savings to generate interest?
c.) Go somewhere in the middle.....?
The place I'm trying to buy has house prices [i]SUBSTANTIALLY[/i] above the national average...typical.
This is all resting on me, the wife can contribute nothing to the purchase.
Help please?
Flexible mortgage such as the One Account - put your savings in to pay off the capital but you are free to take them out whenever you want (without penalty).
Keeping some savings back is sensible for emergencies Shirley?
Your savings will be paying you bugger all in interest, compared to the mortgage rate - so use them, but leave yourself enough for a 'rainy day'. Accepted wisdom is 6 months income...
TBH - if you are struggling to afford to buy, relook at either where you are buying, what you are buying or when you are buying.
Interest rates can really only go up.
Property prices will come down in 'real' terms, but not enough that you'd notice.
They are still not building enough, for sale nor rent.
Sorry, no real advice.
Some savings. Having spent a substantial part of the last 16 years living hand to mouth and with very little savings back up, we could have been saved lots of stress if we'd had a safety net alongside.
cynic-al - Member
Keeping some savings back is sensible for emergencies Shirley?
[i]Don't[/i] call me "Shirley" 🙂
I'd ideally like to keep about half, but i'm not sure that's possible if I want to buy the house I like....
Should I re-evaluate my buying position? Affording the mortgage even assuming a 2% rise in rates over the next 2 years should be okay. If it goes over 3.5% though...
Yep. Agree. Keep a little aside for emergency. And don't over stretch on the mortgage. Rates will be going up towards the end of the year - if not sooner.
[url= http://www.oneaccount.com/onev3/toa/toa-how.shtml ]I don't really think you need to look any further than this though[/url]
When interest rates dropped I put all of our savings into ours. And as said above, it is very easy (web account now available I believe, but ours is a telephone one) to put money in/take it out.
For example, £100k mortgage and £20K savings on top means you are only paying interest on £80k. If you need to take the £20k out (which is the max you can take out, as the rest is the original mortgaged value) it is a quick call and it is in your nominated account within minutes. And no fees, no penalties. But for the time it was in the account you have paid off more on capital and less on interest.
Flexible mortgage such as the One Account - put your savings in to pay off the capital but you are free to take them out whenever you want (without penalty).
JESUS! I've just ran through the calculator!
And?
Assuming I spent [u]nothing[/u] other than monthly outgoings. It would save £105k and have the mortgage paid in less than 6 years.
Yep - it is mental how well it can work for you assuming you can (and DO) overpay.
If you treat it as a standard product (ie, just may the minimum and have no savings offset against it) then they are more expensive than other products.