Check out and keep an eye out for because I think that’s really relevant really important, but this is just an example of what maybe is going to be relevant for Tim, the things for Tim to think about! So I had a look at a couple of scenarios, I’ll explain what I mean. So with Tim’s deposit of £20,000 on a purchase price of £250,000 it basically falls short of a 10% deposit so he’s about, at 92% loan-to-value, so in other words, he’s got an 8% deposit but because it doesn’t fall and hit at least 10% it means he has to have a product which is a 5% deposit product, even though he has 8%. Basically he hasn’t got quite enough to have a 10%. So he’s on that cusp of, if you can get that little bit more deposit, it might mean he’s going to get a better rate what I’m going to do for Tim is look at two scenarios one is a 5% deposit product and the other is a 10% deposit product, just to see how that looks in terms of you know the monthly payments, interest rates and how different it is. Because I think that’s really important to think about that if you’re close to that cusp off you know that border line between this loan-to-value and that loan-to-value, what difference does it make? Because it can make a big difference! So let’s dive straight in. So on a two-year fix and this is what I’ve looked at for Tim, the cheapest deal is with Market Harborough Building Society at 2.99% the rate is really good considering you’ve got a small deposit the arrangement fee is £295, the booking fee is £345 and they’ve got a valuation fee of £200.
Now I’ve based it on a 30-year mortgage term and it gives monthly payments of £968 per month but the big thing about this deal, you only get this deal if you looking to buy in Northampton shire and Leicestershire so unless you’re buying in those areas you’re not going to get in this deal which is a bit frustrating if you’re not buying in those areas so I looked at another example which doesn’t have any restrictions in terms of locality and the next best cheapest mortgage deal is with Principality Building Society at 3.35% but this has got no fees and it’s got a free basic valuations, so the other mortgage deal had fees, this doesn’t have fees, the interest rate is 3.35% compared to 2.99% may seem quite a bit higher, but when you take into account the fees, the cost difference is negligible it’s not much in it. The monthly payments on this one is a thousand and thirteen pounds per month so that gives you a good ideas in terms of what that looks like with your deposit,
Now if you like I said if we look at the possibility of Tim maybe get that slightly bigger deposit to 10%, so if he is buying at £250,000, instead of £20,000 deposit He is going to need £25,000. So you know actually five thousand pounds is a lot of money but let’s see what difference it makes in terms of the deal so again looking at a 2 year fixed rate mortgage on a 30 year term, with a £25k deposit the cheapest deal out there is with Yorkshire Building Society at 1.89% so significantly cheaper than the 2.99% or even the 3.35% and it’s got an arrangement fee of £495 but it does have a free valuations that’s quite good as well the monthly payments are eight hundred and nineteen pounds per month on the thirty-year term.
So if we just think about that for a second even the best scenario assume you can only buy in Northampton shire and Leicestershire, the difference in the monthly payments are £149 per month and if you think about that for a second, £149 a month, over one year the saving difference is about £1,700 # a bit more £1,788 that’s in a year over that two-year deal this is just over £3,500 you could be saving by getting that slightly bigger deposit so that’s where it goes to show you sometimes it is stretched that makes the loan-to-value product you can get so much better and when you think about anything are a hundred pounds infused pans some people might not so I can offer certain ways and a lot but when you look at that over like a year or two years something the savings is significant and I think that’s really worth thinking about when you’re looking to get your mortgage and you think about it deposit and all these sort of things.