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Buying a home: deposit %, does it have to be in multiples of 5?

Discussion in 'Home and Garden' started by KNiVES, Apr 28, 2019.

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  1. KNiVES

    Capodecina

    Joined: Jan 4, 2005

    Posts: 14,808

    I think this is the most appropriate forum for it, apologies if it isn't.

    I'm currently saving for my first home and I've managed to get a mortgage in principle. I'm looking at some properties which I can afford if I put together what I've saved plus the amount the bank is willing to lend me.

    However one thing I am not sure of, is whether or not it's possible to put down a deposit of for example, 7.5-9.5%? All I read about are deposits in multiples of 5%.

    Obviously when it comes to such a large amount of money I often find myself in that 7-9% range when I'm looking at desirable homes. I'm just wondering whether lenders tend to accept such amounts for deposits.

    If you have any other mortgage-related advice it would be enormously appreciated as well :)
     
  2. Stephanie Peterson

    Gangster

    Joined: Jan 9, 2019

    Posts: 477

    I would have thought any mortgage advisor worth there salt could sort this out in a jiffy.
     
  3. Azza

    Caporegime

    Joined: Dec 6, 2005

    Posts: 34,319

    Location: Birmingham

    You can put down a deposit of any £ you like.

    Generally rates change when LTV changes in 5% intervals.
     
  4. Russinating

    Capodecina

    Joined: Dec 27, 2005

    Posts: 15,057

    Location: Bristol

    As above. But I'd really recommend utilising a mortgage broker.
     
  5. Jim99

    Wise Guy

    Joined: Feb 25, 2015

    Posts: 1,189

    It is relatively common to do that. For example, if you want to borrow as much as possible then the affordability maximum is very unlikely to be a multiple of 5%.

    They are usually quoted that way because that's how institutions price mortgages. But if you're applying for an 80% mortgage, they don't really care if your deposit is 20%, 21% or 22%.

    Some people believe that dropping very slightly improves the probability of being accepted, e.g. apply for an 80% mortgage but only ask to borrow 79.5%. I doubt it makes a difference though.
     
  6. Tee Hee Johnson

    Mobster

    Joined: May 30, 2007

    Posts: 3,831

    Location: Glasgow, Scotland

    Usually any percent is fine :)
     
  7. blueboy2001

    Mobster

    Joined: Oct 18, 2002

    Posts: 4,830

    If you’re putting down less than 10%, you’ll need a 95% mortgage deal. These are available, but rates will be higher.

    You must have put a purchase price and mortgage amount in for your DIP which would have calculated a Loan to Value percentage. I would strongly advise not doing any further DIP’s until you’ve had an offer accepted on a property because some lenders do a hard credit search each time.

    It’s worth having a bit of headroom with your LTV, especially at 95%, in the event that the valuation or survey gives a value lower than the purchase price.

    Using a mortgage broker can be worthwhile, but ask about fees. Some charge a service fee, others don’t - the broker will get a decent commission from the lender on completion.
     
  8. The_Abyss

    Capodecina

    Joined: May 15, 2007

    Posts: 11,084

    Location: Ipswich / Bodham

    A minimum 5% is the norm, although there are a few lenders out there now who will lend more than this, but it will cost you with higher fees and interest rates.

    Once you're over that, then there's absolutely no limitation at all in terms of percentage. It is all pounds and pence, nothing else.
     
  9. BigBoy

    Soldato

    Joined: Oct 19, 2002

    Posts: 5,521

    Location: Bath

    No we put down 22.54% deposit on our house, the extra 0.54% was just the balance of cash we had after the solicitors fees and stuff came out.
     
  10. HangTime

    Man of Honour

    Joined: Oct 25, 2002

    Posts: 27,455

    Location: Hampshire

    Deposit can be anything but thresholds for improved rates are typically in [multiples of] 5% increments. So in your situation pushing from 9% to 10% could make a big difference as it will open up a lot more products to you at 90% LTV.
     
  11. Psycho Sonny

    Caporegime

    Joined: Jun 21, 2006

    Posts: 29,697

    this is the only post you need to be listening to.

    if you are at 9% push hard to save that extra last 1% or pay 1% less for the house to hit the 10% bracket.

    it will likely save you thousands over your fix.
     
  12. Mercenary Keyboard Warrior

    Sgarrista

    Joined: Aug 4, 2007

    Posts: 8,225

    Location: Wilds of suffolk

    The 5% bands are simply the lender offering products to the marketplace that differentiate risk to them. If they lend 95% its far riskier than 50% so they price this accordingly.

    Your actual deposit can be whatever you want (subject to minimum)

    The lenders will all score you in the background you will have a maximum amount they will lend to you based on affordability, they will never specifically tell you this. It doesn't matter if your borrowing £100k to buy a £200k house or a £1,000,000 house, if the affordability check says you can only afford to support a £80k mortgage then thats all they will lend. In fact the £1,000,000 house may actually lower your affordability because, the running costs are higher, but thats a negligable thing really.

    There is also no reason you have to drawdown (the funds you actually request from the lender via solicitor) the full amount you were approved for. As long as you don't breach any product restrictions (such as minimum borrowings).
    Your solicitor will normally ask you this question, but people just don't realise it because it comes close to completion.

    This can be quite handy on terminology.
    https://moneyfacts.co.uk/guides/mortgages/mortgage-terminology--glossary-and-jargon-buster131211/
     
  13. Hedge

    Capodecina

    Joined: Oct 18, 2002

    Posts: 16,939

    Location: Somewhere in the middle.

    We had about 18% available but our mortgage advisor said we might aswell keep the 3 percent towards furnishings because the rate at 15% would be the same.
     
  14. Psycho Sonny

    Caporegime

    Joined: Jun 21, 2006

    Posts: 29,697

    depends on how else you were going to pay for the furnishings as you would need to pay interest on that 3% you kept over the term of your mortgage.

    if you had 18% available i would be advising to see if you could get the 2% one way or another. like even borrow off a mate or relative and just tell them we will give you the 2% back plus £200 in a years time for instance. hitting that next bracket would easily have saved you more than £200 most likely but obviously a lot of variables.
     
  15. Mercenary Keyboard Warrior

    Sgarrista

    Joined: Aug 4, 2007

    Posts: 8,225

    Location: Wilds of suffolk

    Not every 5% makes a diff and not every lender is the same.
    Last time I mortagaged, iirc, the bands were 95%, 90%, 85%, 75% and 60%. This is the sort of thing that moves around, and is why lenders can be good at a certain level and not good at others as they try to win certain business.
    60% does seem to be the lowest they consider worthwhile to adjust, I guess on historical models its got more than enough safety margin to be considered the lowest risk.

    Also have to consider that if the mortgage valuer drops the value of the house compared to asking it can also mean your percentage goes up. (Because its not necessarily that the vendor will accept any less)
     
  16. Psycho Sonny

    Caporegime

    Joined: Jun 21, 2006

    Posts: 29,697

    it was every 5% for me down to 60% like you suggest. after 60% LTV seems to make no difference and you tend to be offered the cheapest deals available when shopping around.
     
  17. Hedge

    Capodecina

    Joined: Oct 18, 2002

    Posts: 16,939

    Location: Somewhere in the middle.

    Aye that all makes sense. He did ask if we could make 20% somehow but we were already maxed out which meant the 3% was actually useful for getting us setup in new place. Interest rates were low enough that it wasn't a massive deal. Our first rate was 2.2% then after that two year fix we came down to 1.58%.
     
  18. Psycho Sonny

    Caporegime

    Joined: Jun 21, 2006

    Posts: 29,697

    Seems like you got your mortgage right after the referendum on Brexit?

    I got mine just before it when the outlook was rates would rise and they went the other way. I'm stuck on 2.85% for 5 years with 2 and a bit years still to go.

    Wish I had fixed for 2 years.
     
  19. Mercenary Keyboard Warrior

    Sgarrista

    Joined: Aug 4, 2007

    Posts: 8,225

    Location: Wilds of suffolk

    Ouch bad timing as by current projections your going to come off fixed at the time the rates could rise. Big Brexit disclaimer, but thats now looking to be around the time we head towards a more normal holding pattern.

    Of course its been predicted for a few years now, but IMO Brexit took any wind out of that one.

    Still however, by historical UK standards 2.58% is incredibly low.
    Look how quickly they had to rise in the US once they did. I think we will see 2% base rate very quickly once they need to inject some cooling. Problem is its such a blunt tool with the pain disproportionally inflicted on those least able to stand it.
     
  20. Hedge

    Capodecina

    Joined: Oct 18, 2002

    Posts: 16,939

    Location: Somewhere in the middle.

    Been in property since 2015. So last time I remortgaged at 1.58 was June 2017. It's due again now but rates aren't as good.