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Mortgage advise please!

(9 Posts)
Pollyinapocket Sat 10-Feb-18 23:49:23

Our property is on the market and we are wanting to move to somewhere smaller. We currently own our house outright but all of our money is in the house. Once the house is sold we’d plan to put a

Pollyinapocket Sat 10-Feb-18 23:53:52

bloody adverts .... we’d plan to put a very large deposit down (around 80%) so would only require a small mortgage of £39k. We plan to pay the mortgage off with our wage and then save the rest from the sale of our house to put in savings as we currently have none. Can anybody shed any light on such a small mortgage, are they easier to get accepted? My income is very low (£17k and DH is £28k), please no slating just after some advice. I’ve posted before and got nothing but bad press and bashing blush

planetclom Sun 11-Feb-18 02:00:40

Why when the interest rates are so rubbish? Sounds a bonkers idea. You will get a better rate of return by having no mortgage and using what ever a £39000 mortgage would cost you every month to save.
If you need money for something expensive now then yes putting it on the mortgage should theoretically be cheaper than a normal loan... but depends how long over.

planetclom Sun 11-Feb-18 02:02:58

I haven't seen the previous post so if my comment is I the same lines I apologise but if it is then maybe the advice needs listening to.

You income should easily get the mortgage you are after

Godowneasy Sun 11-Feb-18 03:37:46

This may be a silly question, but do you want to actually move? You could stay where you are and take out a mortgage of £39,000. It would be cheaper than moving and no stamp duty to pay on a new property.

sdaisy26 Sun 11-Feb-18 08:09:13

Like others have said it will cost you less to not have a mortgage & just save the mortgage amount each month. Obv it will take a while for the savings to build up but if it's just to have savings & not because you want to spend it on something specific then it will cost you less in the long term to do it this way.

Caroian Sun 11-Feb-18 08:14:25

To answer the question - you have to go through the same checks for a mortgage no matter the size. So you'll need to pass affordability and credit checks in the same way as someone applying for a 300k mortgage. What makes us "easier" is that it is usually easier to prove you can afford a low amount than a high amount. On your incomes, provided there are no issues in your credit history, 39k should not be a problem.

I would really encourage you to see a good independent financial advisor though. Obviously it is impossible to make accurate comment in an online forum from minimal information, but taking out a mortgage in order to simply have savings (that you have no fixed intention for) could be a long term financial mistake that will cost you money over the course of years. So many factors here including age, when you plan to retire etc. But simply put, money you hold in savings currently may struggle to generate a return equal to the cost (interest) on your mortgage. This means for the life of the mortgage you will not be making any return and may be losing money. If you have no mortgage and no savings you neither gain nor lose. However, with no mortgage you can immediately start saving the money you would use to pay the mortgage and over what would be the mortgage life time you will save more.

Hence, it is usually only worth releasing equity if you actually need the money for a specific purpose. But as I say, you need proper financial advice!

FluffyWuffy100 Sun 11-Feb-18 08:31:15

How old are you?

As others have said - it introduces complexity into the buying process and it would make more financial sense to save a sum each month that you would have spent on the mortgage.

Pollyinapocket Sun 11-Feb-18 10:19:56

Thanks for your advice everyone. I’m 24 to answer my age

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