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Mortgage query

  • 20-01-2012 11:36am
    #1
    lollymob
    Registered Users, Registered Users 2 Posts: 68 ✭✭


    Hi, Im wondering if anyone out there could clarify the query I have in relation to a mortgage.
    I hope to build in the near future but I don't know what sort of a mortgage to take out. I have about 40,000+ in savings so a deposit will not be an issue.
    Here's my question: If I aim to build a house for 220,00 with 22,000 for deposit are my repayments going to be based on a mortgage of 220,000 or 180,000.
    Apolagies this may seem like a silly question but my head is in a bit of a spin!
    Thanks in advance for any replies.


Comments

  • #2
    maggy_thatcher
    Registered Users, Registered Users 2 Posts: 1,056 ✭✭✭maggy_thatcher


    It's based on what you borrow. If you borrow €180,000 the mortgage is for €180,000.


  • #3
    Paraic OMuir
    Registered Users, Registered Users 2 Posts: 9 ✭Paraic OMuir


    If you are building for 220K.
    Using 22K of your 40K in savings as deposit.
    The mortgage is for 198K.
    Leaving you remaining with 18K in savings.


  • #4
    lollymob
    Registered Users, Registered Users 2 Posts: 68 ✭✭lollymob


    Thanks Paraic, that's very helpful!


  • #5
    coylemj
    Registered Users, Registered Users 2 Posts: 25,624 ✭✭✭✭coylemj


    Paraic OMuir wrote: »
    If you are building for 220K.
    Using 22K of your 40K in savings as deposit.
    The mortgage is for 198K.
    Leaving you remaining with 18K in savings.

    Don't agree, why would he keep 18K in savings when he could use that money to reduce the amount he has to borrow?

    He will pay a higher interest rate on the mortgage than he will get in interest from a savings account so it makes no sense to leave 18K sitting in a deposit account when it could be used to reduce the size of his mortgage.

    OP, when the house is finished, put as much of your cash as you can to the principal in order to minimize your borrowings, that means on the numbers above you will be borrowing 180,000.


  • #6
    unclebill98
    Registered Users, Registered Users 2 Posts: 3,816 ✭✭✭unclebill98


    Keep the extra savings.

    Your self build will run over budget.


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  • #7
    lollymob
    Registered Users, Registered Users 2 Posts: 68 ✭✭lollymob


    coylemj wrote: »
    Don't agree, why would he keep 18K in savings when he could use that money to reduce the amount he has to borrow?

    He will pay a higher interest rate on the mortgage than he will get in interest from a savings account so it makes no sense to leave 18K sitting in a deposit account when it could be used to reduce the size of his mortgage.

    OP, when the house is finished, put as much of your cash as you can to the principal in order to minimize your borrowings, that means on the numbers above you will be borrowing 180,000.

    Thanks for the reply. I cant imagine that 200,000 would stretch too far for a self build. I would see it as essential to have other savings in order to finish the house.


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