Best Mortgage

jakhtar1

Hi All

I am a first time buyer and need some mortgage advice.

I am looking to buy a house for around 60k with a deposit of 20k. I would like to borrow 40k.

I can afford to pay around £500.00 per month, would would the best mortgage deal be for me. Fixed over 8 year period with a fixed interest rate for 5 years? or interest only with lump sum payments

Fixed rate - after the 5 year fixed int rate term - for example i pay £30k in five years at a rate of 7% - will this mean i have paid around £28k of the mortgage and can re-mortgage without any costs apart?

Any help would be much appreciated

Thank you in advance

Jan

herbiesjp

YOu need a deal that allows overpayments

Due to the relatively low mortgage amount of £40k, you would probably be better off looking for a deal with low arrangement fees, as opposed to finding the lowest rate (with possible high arrangement fees)

Your post is a little confusing though - do you want a mortgage term of 8 years, but fixing it for the first 5 years?

Of you are asking if repayment is better than interest only, then the answer is, they are both the same really (if you are looking to make lump sum payments into the interest only option)

You would not re-mortgage with a small balance on your mortgage, unless you were looking to raise some capital and find the best deal. WIth only a say £2k left you would stay with your current lender, and avoid any fees for leaving your current lender and set up fees for the new lender

jakhtar1

thanks Herbie for your reply

I think it would be better to go for an 'interest only' option and pay lump sums

By looking at a comparison website if i borrow around £40k my monthly payments would be around £110pcm. This sounds very reasonable but as i know the interest rate is at its lowest, if this increses back to a normal rate of say 3-4% how much wouldi be paying

Thnakyou for your help

Jan