How mortgages work - completely confused

RoxieW

Can someone help me - I'm completely confused
We're currently 5 yrs into a mortgage and are considering going up a rung on the ladder. We'd need to move mortgage provider I think as our ltv will be higher then our current provider usually do. So I assume we'd be starting a new 25yr mortgage from scratch.
Is the interest 'weighted' to the earlier years? So we've been treading water for the past 5 yrs only to start from scratch again?
The plan is to move to the 'dream' house in another 5 yrs time so we are trying to work out whether we are better off financially staying where we are and continuing to pay off this mortgage, rather then starting from scratch with another mortgage for a 'stop gap' house.
Please help

frankw5

I think that you may need to give a bit more info, balance, LTV, deposit for next property etc.

What do you mean by "weighted"?

getmore4less

RoxieW wrote: »

Can someone help me - I'm completely confused
We're currently 5 yrs into a mortgage and are considering going up a rung on the ladder. We'd need to move mortgage provider I think as our ltv will be higher then our current provider usually do. So I assume we'd be starting a new 25yr mortgage from scratch.
Is the interest 'weighted' to the earlier years? So we've been treading water for the past 5 yrs only to start from scratch again?
The plan is to move to the 'dream' house in another 5 yrs time so we are trying to work out whether we are better off financially staying where we are and continuing to pay off this mortgage, rather then starting from scratch with another mortgage for a 'stop gap' house.
Please help

No, you pay interest on the amount you borrow.

Since you have borrowed more in the early years you pay more interest there is no weighting.

You don't have to keep going back to 25y loans just get one on a shorter term.

Stepping stone moves involve extra costs.

Financialy you are beter off borrowing less.

RoxieW

Thanks for that.
Details are -
at the moment we have a £45K mort on a shared ownership property (50%) share. Our interest rate is currently at 0.5% We pay £150 mth in rent on the remaining 50%.
We want to buy a £165K property. We have a 10% deposit so therefore our interest rate will be higher due to the ltv.
We will want to move again in 5 yrs time. But for now we could really do with a bit of extra space, nicer area and having both feet on the property ladder - as taking the 'stop gap' option would give us.
But we dont want to shoot ourselves in the foot by making it more difficult financially to get our 'dream house'.
Can you make sense of it for us?? Thanks

frankw5

Well you are borrowing a lot more with the higher LTV, the lender you are going for will tell you how much payments will be over the various terms. Just select what one suits you. Remember, you do not have just the options of 25 or 30 years, you can go for 27 etc therefore not extending your term too much.