40 Year Mortgage - Should I Change?

Tomo85

I was a first time buyer 2 years ago, and got a mortage from Halifax on a 2 year fix (4.89%) £520 per month which ends end of Nov.

Borrowed £110K over 40 years on a property worth £146K, paid product fee upfront.

Planning on going to a variable rate of 3%with Halifax when my fix ends which I have been told will drop my payments to £418.

I am now wondering why I agreed to a mortgage over 40 years and not 25 or 30? (dont remember being offered anything else at the time)

Would I be better changing the mortgage to 25 years which at 3% would keep my payments at approx £520? Plus this means will be paid off before I am 52!

GSXRCarlos

There's nothing to stop you overpaying to reduce your payment term, however make sure you don't go over any 'Overpayment' thresholds which will cost you more money

I'm on 40 years, but expect to pay back inside 25 by over paying

Tomo85

GSXRCarlos wrote: »

There's nothing to stop you overpaying to reduce your payment term, however make sure you don't go over any 'Overpayment' thresholds which will cost you more money

I'm on 40 years, but expect to pay back inside 25 by over paying

Thanks for that. Will give halifax a ring and see what my "overpayment" thresholds are and look at what I would want to pay each month.

HappyMJ

Once it becomes a variable rate mortgage you will not have overpayment thresholds. Normally only fixed term deals maybe trackers with a tie-in period will have an overpayment threshold of 10% of the original amount borrowed per year.

powerwin

Tomo85 wrote: »

I am now wondering why I agreed to a mortgage over 40 years and not 25 or 30? (dont remember being offered anything else at the time)

Would I be better changing the mortgage to 25 years which at 3% would keep my payments at approx £520? Plus this means will be paid off before I am 52!

My understanding is that with a longer term, over the lifetime of the loan it's going to cost you more, because you will pay more interest, but it's likely that the monthly repayments will be lower.

You should make the decision on whether your financial priorities are near term, i.e. keep monthly payments down, stay at 40 years, or long term, i.e. consider upping monthly payments by either overpaying or shortening the term.

Rgds

Tomo85

powerwin wrote: »

My understanding is that with a longer term, over the lifetime of the loan it's going to cost you more, because you will pay more interest, but it's likely that the monthly repayments will be lower.

You should make the decision on whether your financial priorities are near term, i.e. keep monthly payments down, stay at 40 years, or long term, i.e. consider upping monthly payments by either overpaying or shortening the term.

Rgds

the overall interest that I pay back over the 40 years is one of my main concerns and with what income me and my partner have I am definately going to either overpay or look at shortening the term.