Choosing a term for my mortgage

scotslad1983

Hi all,

Looking for help again! The basic term for a mortgage for a first time buyer appears to be 25 years, but I have also heard there are 30, 40 and even 50 year deals around.

What I was wondering, are there more 25 year mortgage deals available, i.e. are they more competitive?

I am on a salary of just over £20k, looking to get a house at just over £100k, using a deposit of £25k, and I'm 23 years old. Even with a relatively large deposit for a first time buyer of my age, the monthly payments are just that little bit too much. I have added council tax, shopping estimates, phone, gas and electricity etc, and leaves very little left over for leisure. And I like my leisure!

If I can get the option of a 30 year mortgage, I feel this would help greatly, but will interest rates typically be higher for this length, not as competitive as the 25 year, and end up not saving me much money at all per month?

Can anybody help?

Steven.

MEGANJODELLE

Hi,

In my experience a mortgage product isn't sold on the basis of a fixed duration, (ie 25 or 35 yrs). The only "fixes" would probably relate to other parts of the mortgage such as the interest rate. I've recently completed my second mortgage with Northern Rock and was able to extend the term.

Normally, a lender would be reluctant to offer you a term that took you beyond retirement age (maybe as old as 67/68 for someone your age based on changing legislation?). I'm 36 so my mortgage takes me to 65, 29 years. In my expereience, you request the lenght of mortgage that suits you're requirements.

The thing to always remember, is that like any loan, the longer you take to pay it off, the more interest you will pay. However, as our lives and circumstances change, so can our mortgage terms. I intend to overpay mine and clear it before 65. I have colleagues who reduce the term by a few years every time they remortgage.

If you're only 23, I see no reason why you couldn't consider a longer term than 25 years. As long as the mortgage is repayment, there will be ample opportunity to overpay and reduce the term if you wish.

Give it all some thought, considering your future plans as well, for any financial impact they may have on a proposed morgage term.(ie; do you want to marry? have children? maybe relocate at some point?).

Discuss it with an Independant Financial Adviser as well as a trusted, more experienced family member.

I wish you good luck and applaude you for getting on the ladder so young. I was a childish twonk at your age, wasting money on fast cars. I wish I'd got in to property alot sooner!

Hope this helps.

x

mrsc_4

We have a 30 year term on our mortgage we were offered other options as well, make sure you can make over payments as well then you have the chance to reduce the term in the future if you want to or can afford to.