Extending Mortgage Term

Abcynthia

Hi there
Quick question
Just applied for a mortgage as FTB. My broker put us down for 25 years and I didn't fight it but I wish I had. I would prefer 30. My partner and I are both 21 so it would be paid back before we are retired. The application is with Nationwide. Would it be possible for me to phone them up myself and ask them to change this ? I don't want to ask my broker to do it because he's caused us endless trouble as it is and I'm regretting using him!
Thanks in advance

Mrs_Bumble

Can you afford the monthly payments on the 25 year term? A 30 year term will cost you thousands and thousands more in interest payments over the term.

This gives you a rough idea of the sums we are talking about

http://www.moneymadeclear.fsa.gov.uk/products/mortgages/how/how_long_does_a_mortgage_last.html

If you still want to change to a 30 year term and the broker put the application in then you should contact him so that he can get you another Key Facts Illustrations dealing the change of costs to you.

If you can afford it then best advice is always the shorter term is best.

Abcynthia

This is the thing....He did a key facts for us with a 30 year to begin with...We were changing from a different deal....Now he printed this off and looked at this himself and looked at me but did not say anything. I saw what the monthly cost said. He then went I'm just going to go in and change a few things. He then put it to 25 years and the payments went up 50 pounds and chucked the original key facts in the bin. Would he get paid less commission if we went for the 30 years or something? I'm really rubbish at speaking out and I'm kicking myself AGAIN

opinions4u

Abcynthia wrote: »

Just applied for a mortgage as FTB. My broker put us down for 25 years and I didn't fight it but I wish I had. I would prefer 30. My partner and I are both 21 so it would be paid back before we are retired. The application is with Nationwide. Would it be possible for me to phone them up myself and ask them to change this ? I don't want to ask my broker to do it because he's caused us endless trouble as it is and I'm regretting using him!
Thanks in advance

You should ask the broker to make the change on your behalf, or cancel the application and start again elsewhere.

A £100,000 mortgage at 5% repaid over 25 years should cost you close to £75,000 in interest.

The 30 year term increases it to £93,000.

In other words, that £50 a month "saving" will cost you £18,000.

When I was a mortgage underwriter, a request to take a loan over longer than 25 years always made me look in microscopic detail at the rest of the application. It made me ask the question "am I really sure they can afford this?".

I'm not saying that Nationwide's underwriters will take the same approach. But whatever you decide to do about term (and I'd stck to 25 if I were you - mortgage free at 46 is something well worth aspiring to) make sure that buying a house with a mortgage is absolutely the right thing to do.

LeeSouthEast

I'm going the other way when I eventually buy a house. 15 year term seems a much more comfortable amount of time, and possibly less if offset or overpaid here and there.

Mrs_Bumble

LeeSouthEast wrote: »

I'm going the other way when I eventually buy a house. 15 year term seems a much more comfortable amount of time, and possibly less if offset or overpaid here and there.

Tis the way to go

Have a look here how even small overpayments knock months/years off the whole term

http://www.whatmortgage.co.uk/calculators/fleximortgage.html

:beer:

Mrs_Bumble

Abcynthia wrote: »

This is the thing....He did a key facts for us with a 30 year to begin with...We were changing from a different deal....Now he printed this off and looked at this himself and looked at me but did not say anything. I saw what the monthly cost said. He then went I'm just going to go in and change a few things. He then put it to 25 years and the payments went up 50 pounds and chucked the original key facts in the bin. Would he get paid less commission if we went for the 30 years or something? I'm really rubbish at speaking out and I'm kicking myself AGAIN

He will get paid the same as the commission is paid on the amount borrowed at commencement.

As already stated if you can afford the 25 year term then you are savings thousands.

homehunter

People may disagree if they like but depending on your age/circumstances, I don't see the problem with going for a 30 year term in the first instance. We've got one ready (Cap and interest fixed rate) to go for a house we are buying - FTBs - and it is simply so that we can comfortably afford repayments now and make overpayments when we can (which we will). When we come to remortgage (5 yrs) then we'll reduce the term.

LeeSouthEast

Remember the earlier you make overpayments, the greater effect they have in knocking down the principle. Overpayments later on have less of an effect due to interest already paid.

Mrs_Bumble

Its like everything though, you get used to what you are paying. So if you can afford the 25 year term payments and overpay on that then you reduce the term further and ultimately pay a lot less to the lender.

Abcynthia

well, going by everyones advice I think we shall stick with 25 years.
We won't be able to overpay because the rest of the money will have go into savings but hey my partner is going through the second stage of the police selection process today so we might be able to overpay in a few months