Your advice needed and greatly appreciated

micky_blue_eyes_3

First of all I would like to say 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

climbgirl

Hi,

How big is the deposit you have saved up?

It's really up to you how much you take out (if you've been told by a mortgage broker or a bank that the max you can get is £180k). Depends entirely on how much you can get the house for and how much deposit you have saved to put towards that!

Regarding repayments, if you intend to pay it off so quickly by overpayments, you'll need to check that the mortgage you take out allows overpayments without penalties. They will all have different T&Cs so check them carefully. Personally I would take it out over a longer term than the one you're suggesting and make overpayments. Gives you flexibility if your circumstances change.

micky_blue_eyes_3

Thanks our deposit is £10,000 but it's growing by the week. overpayments without penalties check, so would we look for a 25 year mortgage with the possibility to pay overpayments without penalties then work out how much we pay off ourselves to be mortgage free within the 5 year?

climbgirl

I'm no expert on mortgages (and please correct me if I'm wrong!), but I'm not sure that many will exist that will allow you to take them out over such a short period. You may find you have to take it out over a longer term period (say 20+ years) and then work out ways to overpay quickly. I mean, to clear £100,000 in 5 years, you're looking at £1665 a month in capital repayments alone! Would a bank lend to you on those terms on those salaries?!

Check T&Cs very carefully though - clearly the bank is going to lose out on a large amount of interest if it's paid off quickly so they can limit the amount of overpayments in a year, things like that.

micky_blue_eyes_3

Thanks yeah well this was my big question really is it even possible to lend 100k and clear it in 5 years on our salaries I think it's about 1850 a month with interest correct me if I'm wrong (which I more than likely am) and I mean it would be a struggle but I just cant stand the thought of a mortgage that I'm paying back for 25 years it feels like a big noose round my wallet :-)

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.