So if we fix for 2 years...?

Blue_Monkey

... Would we be best off overpaying like mad for that time???

I'm thinking that if we only pay the basic repayment each month then come the end of the 2 year deal we won't have paid much off the loan (as would've mainly been paying off the interest right?), and then when we come to remortgage we'll end up remortgaging for pretty much the same amount as our original mortgage?!

And if this is the case, would we be best off doing the longest possible term (ie 35 years) to get our monthly payments down meaning even more room to overpay??

bigadaj

Almost always good to overpay if you can, beware of restrictions and penalties if you are On a fixed rate though. Taking a longer term and paying off capital is a nil sum game as you are paying more interest on the longer term.

Always remember to stick to the original mortgage term when you remortgage, many have started the clock again for Lowe repayments and found mortgage extending into retirement.

kingstreet

Blue_Monkey wrote: »

And if this is the case, would we be best off doing the longest possible term (ie 35 years) to get our monthly payments down meaning even more room to overpay??

That's a false premise.

If you pay £500 a month, whether that be the contractual payment, or a combination of contractual and voluntary overpayment, you'll pay the mortgage back on exactly the same date, if the interest rate is the same.

Taking the longest possible term and overpaying does mean you can reduce to the lower contractual payment in a month of emergency expenditure, if necessary so it may be a good idea, but for a different reason.

Blue_Monkey

Ah ok thanks, didn't think of it like that.

In terms of overpaying so the remortgage amount is lower - we'll be going with Halifax who have a 10% max annual overpayment allowance. We won't hit this as its a big mortgage.

I guess I need to weigh up whether we want our savings available as cash in those first 2 years or just swallow it and plough as much as possible into the house during that time given that a 2 year fix is our only option due to not meeting many lenders' criteria...

Blue_Monkey

If figures help - mortgage is 80% ltv for £270k (house price £340k). Monthly payments IIRC are £1250. We should be able to save between £1000-1400 per month after all bills/spending money is accounted for.