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Moving home - what term to go for?
kitch
Posts: 20 Forumite
Hi - hope you guys can help. We're in the process of getting a mortgage to move house. We're lucky enough to be upgrading to a bigger house and I have a question around the mortgage term itself.
At the moment, we pay quite a lot out in childcare on a monthly basis, but that will stop in January 2012 when the little one goes to school full time. We also pay out £200 a month to share scheme that we have at work. We will stop paying that in Sept 2011.
So the question is, do we go for a mortgage over the longest term possible (say 35 years) for the next couple of years (probably a 2 year fixed or tracker mortgage) to keep the monthly payments down so that when we come to the end of that product we'll be in a much better financial situation. The childcare and share scheme having ended.
We could then change our mortgage product and drop it back down to 18-20 years etc.
Does that sound sensible or am I missing something reeeeeeeally obvious?
Thank you.
At the moment, we pay quite a lot out in childcare on a monthly basis, but that will stop in January 2012 when the little one goes to school full time. We also pay out £200 a month to share scheme that we have at work. We will stop paying that in Sept 2011.
So the question is, do we go for a mortgage over the longest term possible (say 35 years) for the next couple of years (probably a 2 year fixed or tracker mortgage) to keep the monthly payments down so that when we come to the end of that product we'll be in a much better financial situation. The childcare and share scheme having ended.
We could then change our mortgage product and drop it back down to 18-20 years etc.
Does that sound sensible or am I missing something reeeeeeeally obvious?
Thank you.
0
Comments
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If you are really disciplined, the longest term you can get (but overpay by the maximum that you can afford / your product allows).
If you are not disciplined, go for the shortest term you can afford, making allowance for varying interest rates.0 -
It assumes that you'll be in a better financial position, which can't be guaranteed. Make sure you aren't overstretching yourself with your move and try to save money in your budget elsewhere if possible.0
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It assumes that you'll be in a better financial position, which can't be guaranteed. Make sure you aren't overstretching yourself with your move and try to save money in your budget elsewhere if possible.
I think you're right - it can't be guaranteed, but isn't that a risk you take with getting a mortgage anyway i.e that you'll always be in a financial position good enough to continue paying?
It will just mean that when we all of a sudden have an additional £700 a month in our bank account that we can really reduce the term or leave it as it is a make big over payments.
Like I say, it seems really obvious, but I don't want to miss a big detail that will bite us in the backside.0
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