20year or 25year mortgage?

gotmaintvtr

what would you chose. it works out 100pound a month more roughly for a 20year mortgage?

the end of this year i want to be looking for my own place. and ill still be saving each month once ive moved out to make a big payment after the morgage term.

but just wondering if its worth going for 20 years to help pay it off quicker

jamie

Boozer

Always worth taking a shorter term if you are in a position to do so, i took mine for 10 years, that was 3 years ago, i then proceeded to urinate the spare money away, i wish i had taken it over less.

Just be careful if you are variable and check what you would be paying if your interest rate goes up and also what the SVR will be after your initial period.

dwsjarcmcd

Take it over the shorter term. After the 1st couple of months you won't notice the difference

gotmaintvtr

it only goes up another 140pounds to go for a 15year deal aswell thats quite suprising. takes the repayments for 1k a month to 1200 wich is still easily affordable i reckon.

whats meant by the SVR?

rl290

Please go to the free mortgage guide on this site (go to http://www.moneysavingexpert.com/mortgages/ then click on the mortgage tab). It will answer all your questions.

R

Alisonb1975

choose the shorter term if you can afford it. It will save you thousands in interest!

blueberrypie

I'm going to disagree with the others who've replied and say "it depends".

If you can make overpayments without incurring a fee, it might be better to take the mortgage over the longer term and make those overpayments instead. This way you still effectively pay off your mortgage in 15 years, but you have the flexibility of stopping making overpayments if your circumstances change - a reduced income, increased outgoings, unexpected car/house repairs, for example.

However if you are sure you will always be able to afford the higher payment that a lower term brings and/or you want to make overpayments which are greater than the above would allow, go for the shorter term.

Also check if you can change the term of the mortgage after you take it out. It might be possible, for example, to take out a 25-year mortgage but then reduce the term to 15 years - again, effectively paying off the mortgage in 15 years, but if you are with a lender who allows changes to the term, you have the flexibility of increasing the term again if your situation changes (whereas I suspect that if you started with a 15-year term and wanted to change it to a 25-year term, it might not be so straightforward).

SVR is Standard Variable Rate, which means the rate your mortgage will move onto after the initial period. Often you have a year or three on a fixed rate, then move to SVR, but it's not always the case - Woolwich mortgages, for example, tend to move onto a tracker after the fixed rate ends.

dannymccann

I would persaonlly agree with blueberrypie - always nice to have options

rl290

Also agree with Blueberrypie... but of course, you must make sure there are no overpayment fees. If so, that is what I would do.