Mortgage Advice

Pipz

Good evening all,

I am hoping to purchase a 50% of a shared ownership property in the near future and will require a mortgage of £70K, (I have a 30% deposit in place).

My initial thought (pending approval) is to go for a 5 year fixed rate deal and hopefully overpay where I can. What are members thoughts on this strategy as opposed to a tracker rate?

I'm inclined to fix at present owing to the security of regular monthly payments which will make my budgeting simpler. Any advice/thoughts gratefully received.

ACG

Sounds like you have had a think about it.

One of things we do is an advisor is try to work out what the customer is looking for and this helps to form our research and what we look for.

You seem like you know what you want. The only problem with making overpayments is that people tend to say they will make overpayments and never do so you have to be pretty strict with yourself as its easy to say oh ill stop overpaying and ill go on holiday... not that that is a problem, but it will obviously affect your plans of paying it off sooner rather than later.
The other thing is that most mortgages allow you to overpay 10% per year, anything over than incurs an early repayment charge. Will 10% be enough? If so, great. If not then it might mean you have to think about things differently.

Pipz

Thank you.

Yes the intentions are all good

The mortgage provider allows 10% overpayment of the mortgage balance at 1 Jan each year. As a result my thoughts are to meet that 10% each year and then put any other money into an ISA. As the value of the 10% reduces each year I will be able to put more into savings each year (assuming circumstances don't change). At the end of the 5 years I can then put these savings against the balance and re-mortgage to another deal or stay on the SVR and throw as much money as possible at it!

I believe that interest rates are more likely to rise than fall over the next 5 years which is why the fix appealed to me. I was trying to weigh up the advantages of a 25 vs a 30 year term. I'm aware of the lower repayments on the 30 year term which increases flexibility. My thought is that I won't pay as much interest on the balance if I take the 25 years (with the above strategy in mind).

Can anyone see anything glaringly obvious that I might have missed?

ACG

Everything you have said makes sense.
If you go for the 30 year term then your monthly payments will be less and so will be the amount that you can overpay by.

Other than that you seem to be on top of it all.

Pipz

Thanks very much

kingstreet

ACG wrote: »

If you go for the 30 year term then your monthly payments will be less and so will be the amount that you can overpay by.

The mortgage amount is the same, though?

getmore4less

Whats the plan to pay off the other 50%, if you can't afford it now you will need increases in income or cash windfalls.

ACG

Your right, no idea what i was thinking...
Late night the night before but thats no excuse.

Pipz

getmore4less wrote: »

Whats the plan to pay off the other 50%, if you can't afford it now you will need increases in income or cash windfalls.

Once the mortgage is clear on the initial 50%, then I'll purchase the remaining share at leisure. I'll be paying rent to the Housing Association for as long as they own that 50% so there is no time limit.