7 year mortgage?

woodsey2002

After missing out on 2 houses in the last few months we're hoping it's third time lucky with the one we've just offered on.
It's considerable cheaper than anything else we've looked at and we'll only need 1 X income and have a 20% deposit with a decent amount kept aside to extend and renovate before we move in as we can stay in our rental until it's done.
As we've been previously approved to borrow up too 500K we were expecting monthly payments of at least £2000 but because we're borrowing a smaller amount we have worked out we can take this mortgage over a 7 year period but having spoken to a few people they've expressed concerns that lenders aren't too keen on this as of course they don't make as much money from interest on the loan?
Does anyone have experience of this?
We are also classed as FTB's again as we haven't owned a property in the Uk since 2004 and we're also hoping to overpay considerably each month to hopefully be mortgage free in under 5 years. Not sure if this makes a difference?

paddedjohn

You are not first time buyers if you are not buying for the first time.

woodsey2002

paddedjohn wrote: »

You are not first time buyers if you are not buying for the first time.

Every bank and building society we've enquired with and also a mortgage broker that we previously dealt with has said that we are classed as FTB's again as we haven't had a mortgage in recent times. Of course in stamp duty terms we are not.

Argonaut1_2

Just take out a longer term then (say 2 years), then change. Nationwide allow you to change the term of your mortgage at will, for a £20 charge.

Alternatively, just get a mortgage that allows unlimited overpayments, or an offset mortgage.

EIther way, even if lenders don't like your term (which I am not sure they are so bothered about), you should be golden....

opinions4u

Statistically, most mortgages last between 5 and 10 years.

Don't worry about what the lender is considering from a profitability point of view (many prefer to get their money back sooner in the post Credit Crunch era) - their only true concern is going to be affordability. A short term means higher contractual payments.

Personally I'd take a "normal" term and overpay as long as the mortgage allows me to. Most lenders let you pay of an extra 10% of captial annually. This should easily let you clear the debt within 7 years. Check the small print before you sign up for it.

rumncoke

I would also look at getting a normal term & then overpaying, checking t&c carefully first. At the moment you are obviously in a good position to make large monthly payments, but circumstances can change all too quickly.
3 years ago we took out a 220k offset over 20 years. monthly payment £1600 approx. Reduced this 12 months later to 60K (sale of a property) but left term as it was, just OP every month, hoping to be MF by 2013.
Fast forward to now. Due to ill health DH now long term sick, joint income now dropped from .84K to 9K plus WTC & CTC.
As mortgage term is still 17 years our minimum payment is only £225 a month. If we had changed term to 5 years we would be struggling now. & savings would be going on mortgage every month, as it is we can manage fine until his health has improved enough for us to look at other work options.

dimbo61

As others have said you should look at offset mortgages carefully which allow unlimited overpayments as long as you dont repay completley the mortgage before the end of any fixed rate period!
I would then overpay/save into the offset accounts 50/50

B'stard

Have a look at the thread I posted here - https://forums.moneysavingexpert.com/discussion/3191276=

I took out a 7 year mortgage last year with a 5 year fixed rate with Nationwide. I'm finding I'm able to pay the monthly payments plus £500 over payments. I have checked the online mortgage over payment calculators and should hopefully only have another 25 months to go to pay the mortgage off fully.

I have checked with Nationwide and they have said that as long as I don't pay a lump sum settlement I won't incur any early redemption charges.