Increase years on Mortgage???

littlechezza

Not sure what to do, have mortgage with 25 years left but struggling each month what with childcare costs, bills etc., would like to get some savings put away and we need to build a small extension on the side of our babys bedroom (I know this may not seem like a good idea but the extension will be £4000 and if we move for a bigger bedroom it would be an extra £30000) thought it would be best to increase mortgage to 30 years when adding extra money on and then reduce or make extra payments off the mortgage as childcare costs come down, please could anybody offer advice on whether this is a good idea or has anybody been in the same situation

:rotfl:

silvercar

You could move to interest only mortgage for a short time. Only do this for the short term as it means that you are not reducing your debt at all.

roswell

Can I suggest you post a SOA in the debt free wanna be board they moy be able to spot money you dont need to spend each month,

If you borrow nore you will pay more interest if you extend the term you will pay more interest, If you cant make overpayments at present and you cant afford child care costs that will most likely increase not decrease it may be time to look at your full financial standing and make changes to the spending rather than the extending of debt

littlechezza

Would this work out better than adding years on and with the extra money we would need do you think this would benefit us (our current mortgage is £98000) sorry to sound a bit dim but I'm not an expert on mortgages as you can probably guess

Rikki

If you go interest only even for a short while I recommend you have life insurance inplace incase anything happens to you and secondly you will still have to pay off the fuul amount of your mortgage outstanding at the end of the 25 years.

violetb_2

Hi there

Please think really carefully about all your outgoings etc before adding years onto the mortgage. Do you really need the extension at the moment, could you look at how you use your space first. It sounds like things are quite tight at the mo and you may be better off just looking at cutting back before spending more (been there done that, didn't have enough left over for the t-shirt!!).

silvercar

assuming your 98000 mortgage is on 5% interest;

monthly repayments for 25 year repayment mortgage = 572
monthly repayments for 30 year repayment mortgage = 526
monthly repayments for interest only = 408

for a 102000 mortgage the figures increase to:
monthly repayments for 25 year repayment mortgage = 596
monthly repayments for 30 year repayment mortgage = 547
monthly repayments for interest only = 425

Remember interest only is short term only; it won't repay the capital owing.

littlechezza

Hi Silvercar

We do have life insurance, just want to ask can the interest only be changed after 1 year or do you keep to the interest only for the full 25 years

Thanks

Joe_Bloggs

What would you gain for £4000 pounds of building work ? Certainly a lot of dust and disruption. Does your mortgage company know of these plans ?
Why not consider training in the area of child care yourself ? Are you going to have any more kids ? The last question is too personal even for an anoymous forum but it is a factor in your future financial plans and housing needs. Consider your options but don't overstress yourself. If there is something you don't understand, then this is the forum to ask questions. Your question and the answers may help others in the same position.
J_B.

silvercar

Normally you can phone up and change from interest only to repayment and vice versa, some lenders charge (about £75?) to make the switch. You would then have to change back again when it suited you.

Some lenders will offer payment holidays for a couple months if your mortgage is in good standing. Just means you don't make a mortgage payment but interest is still added on to the loan.

MortgageMamma

Have you thought about remortgaging onto a fixed stepped mortgage?

They work by giving you lower payments in the early years and then gradually increasing the amounts. Obviously you would have to consider this carefully but here's an example:


Year 1 - 3.99%
Year 2 4.99%
year 3 5.49%

there is sometimes an extended tie in on standard variable rate after you come off the last year, but again some don't do this. If for example you switched all or part of your mortgage on interest only, and had a fixed stepped at the same time I think this could help alleviate the pressure for you.