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

sonastin

I don't think any mortgage lender would believe you could pay off that much in such a short space of time. Regardless of how frugally you know you can live, their affordability calculations won't let you. So you'll have to take out a mortgage for a longer period of time than 5 years. Make sure you get on which allows overpayments so that you can pay if off as quickly as possible - most will allow something like 10% of the capital each year, or £500 per month or something.

Just a few questions though:
1) how much deposit are you planning to put down?
2) how much do houses cost around your area (i.e. is £100k + your deposit enough to buy the sort of house you are after)?
3) how much do you think you can afford to repay each month? Have you factored the interest into the calculation for paying off the mortgage?

I have to say £100k in 5 years on a £50k income sounds like a REAL challenge to me, but if you think you can live on a teeny amount and put most of your money onto the mortgage, it might just be possible. Don't forget all those little expenses of owning your own home though, like fixing the heating in the winter, buying furniture, decorating your place so it feels like home, etc!

ViolaLass

As sonastin says, the bank are unlikely to believe that you can pay that money off in 5 years but to answer your questions:

1. No, you don't have to borrow £180k if you want less. It's a limit, not a target.

2. There are plenty of mortgages to be had that allow unlimited overpayments. You could get one of these then overpay as much and when you want. That way, if something goes wrong and you can't pay as much as you had hoped, you will have committed yourself to a lower payment.

micky_blue_eyes_3

sonastin wrote: »

I don't think any mortgage lender would believe you could pay off that much in such a short space of time. Regardless of how frugally you know you can live, their affordability calculations won't let you. So you'll have to take out a mortgage for a longer period of time than 5 years. Make sure you get on which allows overpayments so that you can pay if off as quickly as possible - most will allow something like 10% of the capital each year, or £500 per month or something.

Just a few questions though:
1) how much deposit are you planning to put down?
2) how much do houses cost around your area (i.e. is £100k + your deposit enough to buy the sort of house you are after)?
3) how much do you think you can afford to repay each month? Have you factored the interest into the calculation for paying off the mortgage?

I have to say £100k in 5 years on a £50k income sounds like a REAL challenge to me, but if you think you can live on a teeny amount and put most of your money onto the mortgage, it might just be possible. Don't forget all those little expenses of owning your own home though, like fixing the heating in the winter, buying furniture, decorating your place so it feels like home, etc!

Great info just what I was after thanks we have a 10k deposit and the houses round my area go for next to nothing it's a bit of dive to be honest 100k buys you a decent house! I mean we have sat down and calculated everything from gas/elec to gym membership etc but I feel we must be missing something! I might be diving in the deep end here a little bit but I just want to be mortgage free as soon as possible, if this is the wrong way of going about it I'm open to ideas of possibly paying it of a different way possibly longer what would you suggest if you were in my shoes thanks for the advice up to now though :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.

GDB2222

If you are going to a mortgage broker, put what you just wrote above in a letter to the broker. And keep a copy.

There are loads of mortgages that allow unlimited early repayments WITHOUT PENALTY - and the rest allow early repayment if you don't mind paying a hefty penalty (which I am sure you do mind).

Take out a mortgage for 25 years, same as everyone else, and just pay it back very fast. Some mortgages used to charge you interest on the full balance at the start of the mortgage year, even if you paid back capital during the year. Check that point with your broker, but it may be old hat.

unbeatable

Hi there,
Well first of all, you have done your homework to decide how much you want to spend on the house. I think if I were in your shoes, I will buy the house with a 2 yr fixed or 2 yr tracker. This will give me a bit more experience with owning the house and paying the mortgage. Also since I have a plan to pay off quickly, I will start to put away a good chunk of money (due to my prudence) over the period of the 1st year, then after which I can pay the 10% allow over payment by the lender. Now before the end of the 2nd year I would have known if I have enough savings or not which I can then put towards the remortgage thus giving me a clear picture if I am on target or not.

By the time you have spent 2 years paying your mortgage and living in my own house. The above question would surely have a good answer.

jahudson72

Currently going through the process myself and have got a 25 year deal fixed rate tracker for two years that I can chuck as much money at as I want which suits me fine. Because you never know what's going to happen. You could lose your job, you could have an accident - I did both at the same time and ended up off work for nearly a year, single with a large mortgage to pay. I admire what you're trying to do, but circumstances change. Incidentally on mine I can over pay it and draw some back if my circumstances change.

Good luck

Mrs_Arcanum

If you do not have to there is no reason why you couldn't go for a 15 or 20 year mortgage with a non (or very low) early repayment clause. The 25 year mortgage seems a bit of a fixation. Our 20 year one was only a few pounds more per month than the 25 but will be paid off sooner & less total borrowing overall.