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How far to stretch when buying a house..

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  • How far to stretch when buying a house..

    Please can I get some advice! Myself and my partner have got a good deposit together, first time buyers, chain free and am looking to buy in london. We are also looking to get married in a year and a half. We have been looking for a property for a year now and just havent found anything we have liked/been too fussy! I have done the sums and we could put a 20% deposit together comfortably on a property and still have money available for the other house related fees, wedding fund etc.This would be a 30 year mortgage, 4 year fixed, 3.49% rate (option a).

    Option b) If we found something that we really really really liked we could go up by £5-10k on property price however our deposit would be lower (15%), 3 year fixed rate would be 0.14% higher, 4 year fixed rate would be 0.45% higher. The average increase in mortgage each would be about £60-70. Deposit being lower has an advantage as would mean an additional money for wedding, rainy day, house furniture.

    What is better money wise option a or b? i am thinking its better to go with option b - borrow more money as we have the expense of the wedding to pay for and we will be fixed for 3/4 years which will provide security.


  • #2
    Re: How far to stretch when buying a house..

    Hi Aranya,

    In my opinion it's always best to borrow as little as possible - that way your payments should be lower all things being equal.

    Plus the rate on a 85% versus a 80% can be quite a bit higher.

    The best idea would be to talk things through with an experienced mortgage broker - and take things from there.