Your advice needed and greatly appreciated.

micky_blue_eyes_3

First of all I would like to hello to you all and thanks for taking the time to read this.

My predicament is I no nothing about mortgages so first I will attempt to outline what I would like to achieve and maybe any of you helpfull folk out there would like to give me some advice or steer me in the right direction.....

I am looking for my first home with my partner (we have been renting for a few year now) Both in our mid-twenties. I have an income of £25,000 a year and she also has an income of £25,000 a year, both very stable jobs. What we would like to achieve is to be mortgage free in 5 years we have been told we can borrow up to £180,000 but we are only after a house around £100,000 as we are first time buyers. Is there anyway you can get a mortgage for £100,000 and pay it off in 5 year? are you allowed to do this? I no it will be a stretch but I have lived on the breadline all my life (only recently been promoted) so no how to stretch the penny's.
Any advice is appreciated even if you tell me to take the £180,000 or to take it out longer but if you are going to do this could you try and explain why it would be better.
Thanks alot

curlygirl1971

Hi Micky

Welcome to the MFW board. I think planning to be MF before you even have an Mortgage is brilliant....wish I'd that insight and ability!

If the house you want is only £100k then by all means take out a mortgage for £100k less any deposit you have put by (don't forget you will also need money for fees and any additional furniture, decorating etc.)

Just because someone will lend you £180k doesn't mean that you have to take them up on it

There is no quick answer regarding the term. I think the best thing to do is go and see a mortgage broker and/or call in at a few banks and chat to someone and get some illustrations. Don't be put off because you don't know about mortgages now - everyone starts off like that - but make it your business to learn about them.

Be aware that when you take out a mortgage you are usually 'tied in' to a rate either fixed or variable for a fixed period of time and during that period you can't overpay or can only OP by a %. Only when that period ends can you OP to your hearts content.

I have a 25 year term mortgage.....I've been on it 9 years already and by Over-paying the last 2 years I've already reduced the over-all term to 19.5 years.....any further OP's I make will reduce this figure even more, although if interest rate goes up I will either have to increase my OP's or accept that the term could rise.

So you need to get a good knowledge of the products currently available and who will do what for you.

Some banks have online calculators that will tell you what they will lend you and at what rates.

One great way of seeing how a mortgage works, the impact of interest, how much your standard payments might be, the effect of over-paying, compare one mortgage against another......is to take a look at a mortgage calculator.

There are lots of them around but I presonally use one provided by an MSE'er called Locoblade. Here is a link to his thread - spreadsheet in first post.

https://forums.moneysavingexpert.com/discussion/1157173

If you are not used to spreadsheets it can be a little scarey at first but just play around with it and once you've done a bit more mortgage product research you will be able to populate it with real figures

micky_blue_eyes_3

Thank you very much for taking the time to reply it's some great info I wasn't sure where to post this so I put the thread in quite a few sub sections I hope I didn't break any rules anyway your information has been taking on board and I'm off to check out a mortgage calculator Thanks again Michael :beer:

micky_blue_eyes_3

Also I posted this thread in a few sub-sections of the other forums as I didnt quite no where to put it I hope I didn't break any rules I'm a newbie sorry.

getmore4less

Usualy best to post in one place and put links in other places back to the original,

makes it easy fot you to find the answeres.


anyway

target 5 years but loads can go wrong.

SO I would go for a flexable 25 year deal(offset would work) and overpay/save/offset as much as you can, if things go wrong with income you have control.

get a 5 year loan with high payments and not so easy.

To work out if it is feasable budget, costs of owning are higher than renting.

But the basic is can you pay the amount needed

http://www.whatsthecost.com/mortgage.aspx

£100k @ 5% over 5 years is around £1889pm
£100k @ 0% over 5 years is around £1667pm
(so rate is not so critical its the capital that the big chunk)


Bigger the deposit the smaller the loan.

if you can save(+rent) around £1900 then you are well on target.

micky_blue_eyes_3

thanks alot it's a lesson learnt I will be only posting once in future ...... wow your advice is great and I have soaked it up like a sponge it is all starting to make sense to me so from what I have gathered it will be best for me to take out a 25 year mortgage with overpayments without interest and pay off what I can then if things don't work out as planned with income etc I have a better chance of paying off the lower payments.