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

getmore4less

shamilt1 wrote: »

So I've seen this mortgage http://mortgages.firstdirect.com/mortgage-rates/product/life-tracker-repayment--fee-free%7E80
a life tracker. So am I correct I calculating it this way?
Year 1
61000 + 2189 interest= 63189. If I pay 1100 per month that's 13200 paid off in a year leaving 49989.
Year 2
49989 + 1794 = 51783
Take off 13200 that leaves 38583

and so on. Am I working this out correctly ( as long as interest rates don't rise?)

you need to use a calculator, I use

http://www.whatsthecost.com/mortgage.aspx

Set to interest only and put in your actual payment for DIY overpayment calculator.

details will give you month by month

play with interest rates monthly payments terms.

getmore4less

shamilt1 wrote: »

Actually this one looks better https://mortgages.hsbc.co.uk/product/A001002837001002838001002839-lifetime-tracker-special-fee-free?source=results
Low interest rate, unlimited overpayment, fee free & no tie ins. What do you guys think? I'm a little unclear as to whether I can overpay more than 20% on my monthly payments though. I think I'm allowed but I'm going to ring them to find out.
Edit- Just rung and I can overpay by as much as I want. Sounds good!

Look OK, so you can use this as a benchmark to test other offers.

use the calculator to do side by side.

set the rate for each deal and the payment(same across all deals) and see how much you pay off with each over time.

This will show you what the it costs to fix so you can do the risk anaylsis on rate changes.


More advanced, you could do the tracker for a year and then look at a rate rise and see what happens.

overpaying has a significant effect of the future costs.

shamilt1

getmore4less wrote: »

Look OK, so you can use this as a benchmark to test other offers.

use the calculator to do side by side.

set the rate for each deal and the payment(same across all deals) and see how much you pay off with each over time.

This will show you what the it costs to fix so you can do the risk anaylsis on rate changes.


More advanced, you could do the tracker for a year and then look at a rate rise and see what happens.

overpaying has a significant effect of the future costs.

Thanks so much for the time and effort you (and others) have spent on looking at my mortgage choices. I have been to my bank and he recommended the offset, but as its only a two year product ( which put me off) and my savings will definately drop in the next few years ( Florida holiday and a car) then the offsets figures based on my current savings probably looked better than they would realistically turn out. I have decided to go for the the tracker I pointed to earlier in this thread ( the 2.99% one) over a 10 year term and overpay as much as I can afford to. That is unless I find a better one in the next day or two.

getmore4less

Remember you can also manage cashflow with your savings/excess income/overpayments.

You could overpay say 4 months worth now and then rebuild saving, won't save a lot more but avery little bit helps

littlemrtinkle

shamilt1 wrote: »

i'm going to see the bank on friday as my current mortgage product is coming to an end. I owe around £61000 and want to pay it off as soon as possible ( obviously!). I went on moneysupermarket and put in my details and it shows that if i do a 5 year fix mortgage then my payments will be around £1117 a month. What i'm not sure about though is whether you can take out a mortgage which will be completely paid off in this relatively short space of time? I mean they're normally 25 years right? Also, if i'm allowed to do it, is a 5 year fix my best option - it shows i will be paying back a total of £67128, which seems like pretty low interest to me compared to what i'd be paying over 25 years. Any advice much appreciated as i am not really that clued up on mortgages. Thanks a lot, steve.

take out mortgage over 25 years. Reduce term to 5 years a week later. That way if in poo if you get laid off or circumstances change you will have a much lower payment to fall back on!

getmore4less

littlemrtinkle wrote: »

take out mortgage over 25 years. Reduce term to 5 years a week later. That way if in poo if you get laid off or circumstances change you will have a much lower payment to fall back on!

If you change to 5years then the lender may not let you change back to a longer term so stuffed.