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Overpay or make the term shorter?

airhostess
Posts: 215 Forumite


I'm in a position where I would be able to buy a property for a very good price, putting down a 30% deposit and still have lots of disposable income left over every month (mortgage would be under £200 per month if taken over a 25 year term, taken over a 5 year term it's more likely to be around £650.)
In order to be more efficient with paying off the mortgage, instead of making regular overpayments, should I just ask for a mortgage over 5 years instead?
What is the maximum % that lenders generally allow you to overpay per year?
I am torn between knowing my mortgage will be cleared in 5 years for definite and having flexibility to pay only £200 per month if the worst did happen and we both lost our jobs etc and were left with no income whatsoever.
Would the most sensible solution be take the mortgage over 5 years, and just buy insurance to cover us in the event of accident, sickness & unemployment etc?
Thanks very much for any ideas!
In order to be more efficient with paying off the mortgage, instead of making regular overpayments, should I just ask for a mortgage over 5 years instead?
What is the maximum % that lenders generally allow you to overpay per year?
I am torn between knowing my mortgage will be cleared in 5 years for definite and having flexibility to pay only £200 per month if the worst did happen and we both lost our jobs etc and were left with no income whatsoever.
Would the most sensible solution be take the mortgage over 5 years, and just buy insurance to cover us in the event of accident, sickness & unemployment etc?
Thanks very much for any ideas!
0
Comments
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I would probably go for a portable offset over 25y.
unlimited overpayment, loads of flexability, and if you want to move potentialy access to enough funds to not need a remortgage.
Use the income protection insurance fees to overpay0 -
Why not go with a 12-15 year term and over pay a little?
My bro shortened his term to save money, but as soon as him finances changed, he could not longer afford the mortgage and got repossessed.
Be very careful about taking short terms and commiting yourself to high paymemts.Mortgage - £37k
Credit Card (A&L) -[STRIKE] £2300 -[/STRIKE] £1200
Santander Credit Card - [STRIKE]£1400[/STRIKE] £1100
[STRIKE]OD - A&L - £1300[/STRIKE] GONE!!!
"I will be debt free, I will be debt free!"0 -
Interest rates are low at the moment but will have to rise at some point - something you need to consider - would you be able to afford increased payments then?0
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