Can I take a 5 year term mortgage & is it my best option?

Simon_gloster

If you stick with your current lender they will not carry out an affordability assessment, therefore transferring to a 5yr deal and reducing the term to 6 yrs may he possible (you cannot have a 5 yr term on a 5 yr fixed rate as the term must end after the end date of the fixed rate).

Remortgage to another lending and you kay encounter a minimum term restriction should the household income not be massive in comparison to your mortgage debt.

Is your lender Chelsea?

shamilt1

Simon_gloster wrote: »

If you stick with your current lender they will not carry out an affordability assessment, therefore transferring to a 5yr deal and reducing the term to 6 yrs may he possible (you cannot have a 5 yr term on a 5 yr fixed rate as the term must end after the end date of the fixed rate).

Remortgage to another lending and you kay encounter a minimum term restriction should the household income not be massive in comparison to your mortgage debt.

Is your lender Chelsea?

Didn't know that- throws a spanner in the works a little as I really want to get it paid off in 5 years. Household income is about £56000 per annum- mortgage remaining is £61000. My lender is Accord, and the 5 year fix I'm thinking of going with is with Yorkshire Bank.

Simon_gloster

Income should stack up. The term shouldnt be an issue. Do 6 yrs, use their 10% overpayment allowance each year to bring down.

Check with accord the fixed end date vs term thing.

R_P_W

What do you think your LTV % would be?

I have recently been approved for a mortgage and did a lot of reading/research before hand to see what was best me my personal circumstances. I like you want to be able to overpay, some lenders have restrictions (i.e. you can only overpay 10% of the balance outstanding per year, or you can only overpay 500 a month). It depends on the lender but what I generally noticed was that fixed rate periods usually have a restriction on it, where as the trackers didn't seem to.

Why don't you go and see an independent broker and see what is available and what lenders are likely to suit your circumstances. If you have access to a wide range of products (i.e. your history is good) then why wouldnt you just get your self on the lowest % tracker you could and then overpay as much as you can?

shamilt1

House is worth £180000, loan outstanding is £61000 so LTV % is around 33%. I wanted to fix as I am determined to get rid of the mortgage within 5 years and know if everything stays the same then I can afford to on this 5 year fix. As I am no expert I also like the simplicity of it, knowing exactly how much interest I will be paying ( just over £6000 over the term sounds pretty good to me) and a date when I will have finished paying it all off. With a tracker, I fear it will be harder to tell when I'll get it completed.

Having said that, a previous poster informed me that you couldnt have a 5 year term on a 5 year fixed mortgage- sort of screws my plans up a little, but thats why I came on here, to find out if there are any potential problems with my plan before I see the bank on Friday.

The other thing I worry about with a tracker is if the rates shoot up ( I know this seems unlikely at the moment, but nothing is certain) then I won't get it paid off as soon as I like.

andy.m_2

you seem to be getting your head confused by the fix/variable options, also by the length of term.
As you say yourself you're not best at mortgages.

Wisom and convention says that you are better of holding a longer term loan but paying it back within the 5 years you crave.
This way you have a built in contingency plan should you need to, but you can still pay it off within the 5 years.
It won't cost you any extra to do this, you will not be penalised in any way.

Go to an independant mortgage advisor and spend a half hour or so there, it WILL reap big financial rewards for you.

shamilt1

andy.m wrote: »

you seem to be getting your head confused by the fix/variable options, also by the length of term.
As you say yourself you're not best at mortgages.

Wisom and convention says that you are better of holding a longer term loan but paying it back within the 5 years you crave.
This way you have a built in contingency plan should you need to, but you can still pay it off within the 5 years.
It won't cost you any extra to do this, you will not be penalised in any way.

Go to an independant mortgage advisor and spend a half hour or so there, it WILL reap big financial rewards for you.

Thanks. After listening to you guys it looks like a tracker with no penalties for over payments may be the better option. I am a complete novice at all this- by the time remortgaging comes around, I've forgotten what I had learned the previous time! If I go for a longer term mortgage, does that not mean I have to pay more interest- or is that only the case if the mortgage runs its full term? I could do with speaking to a mortgage advisor but the last time I did he wasn't much cop- I also don't like to pay someone if I can research and find things out myself. Got a way to go yet though! Anyone know a good advisor in the Keighley, West Yorkshire area who is cheap/ free?

dimbo61

Offset mortgages and some but not all trackers allow unlimited overpayments.
Now like you I have been trying to clear my mortgage asap so I took out a 5 year fix with YBS but it was a offset mortgage so we took out a longer term and then increased the DD to a much higher rate than needed to overpay the mortgage.
I have reduced my mortgage debt by overpaying and built up savings in the offset account ( which is where you could put your savings!!!)
I wanted the security at the time of a fix ( I may well have paid more interest than I needed too) but with a large mortgage I did not want to take the risk.
I can check my balance online ( every day sometimes SAD I KNOW )
build up a great savings pot and watch the mortgage debt go down each month

getmore4less

Who is your current lender?

Is that follow on rate the rate it says in your docs or a rate you have checked recently.

you can get 5 year fix 5 year term.

With an offset you don't have to save in the savings accounts you can just overpay like you do now.


Allthough fixing is atractive the variable rate may be worth the risk if much lower.

With 61k debt, 20k savings and £1117pm

looking at FD offset 65ltv fee free 3.89%
http://mortgages.firstdirect.com/mortgage-rates/product/base-rate-tracker-offset--fee-free~59

You will be net zero in 40 months with total interest of £2725 (+ what you would have got from the savings).

actualy the 2 year fee free discount tracker is better £2506 interest 39months
http://mortgages.firstdirect.com/mortgage-rates/product/2-year-tracker-offset--fee-free~6


there are probaly better deals that that with a bit more research, FD are a good benchmark for offsets and regular mortgages

shamilt1

dimbo61 wrote: »

Offset mortgages and some but not all trackers allow unlimited overpayments.
Now like you I have been trying to clear my mortgage asap so I took out a 5 year fix with YBS but it was a offset mortgage so we took out a longer term and then increased the DD to a much higher rate than needed to overpay the mortgage.
I have reduced my mortgage debt by overpaying and built up savings in the offset account ( which is where you could put your savings!!!)
I wanted the security at the time of a fix ( I may well have paid more interest than I needed too) but with a large mortgage I did not want to take the risk.
I can check my balance online ( every day sometimes SAD I KNOW )
build up a great savings pot and watch the mortgage debt go down each month

I think I may have had one of these a long time ago with Yorkshire Bank. Is it the one where every thing is lumped together, so if you put your cash card in the hole in the wall for a balance, it will give you a figure of mortgage owing after taking savings into consideration ( eg mortgage 61000, savings 20000 so balance minus £41000?). If it is I could never figure out how much my mortgage had gone down!