Mortgage advice - fixed or variable rate? Over 25 or 30 years?

dimbo61

First of all you do not want to pay one penny more than £250K or you will pay 3% stamp duty and that is over £7500 to the TAX man.
It is bad enough paying £2500
Now if you take the mortgage over 30 years you may find the mortgage company say NO as you need proof of income when 67 years old.
You will also have the problem of paying very little off the mortgage in the first couple of years if you take a 30 year term!!
I love offset mortgages and have a mortgage with YBS ( but do not work for them)
Now you could ask a " Whole of market mortgage broker " to find the best deals BUT I would ask that you consider a long term offset FIX of 5 years.
Build up emergency savings in the offset accounts and gives you time to pay off some of the mortgage debt while having the security of knowing what you mortgage costs will be for the next 5 years.
rates have never been this low.
If you paid £200K for a property and put down £50K you would be looking at a 75% LTV and even better rates ??

dimbo61

Please put some figures in the website " whatsthecost" and see how much you would save by spreading the mortgage over 30 years instead of 25.
Save about £50-75 a month and how much would you have paid off over 5 years ( over a 25/30 year term)

retepetsir

anotherginger wrote: »

I'm no mortgage expert but have managed to get one within the past year.

I would worry about a monthly payment of 1100 on your joint income. You are trying to borrow 5x your salary which is really pushing it. Our joint income is slightly more than yours but we didn't really want to go above 600 per month in case one of us lost our jobs - quite likely in the current climate as we're both in public sector. This was the maximum that would be doable if we only had the lower salary available.

We fixed for 5 years, 25 year term, 4.19%, and had 25% deposit.

My best idea would be for you to go through a few mortgage calculators online to see what is possible. I don't have kids so not sure how they would affect your application if you have any.

Unfortunately that's not possible for everyone. Our current mortgage is £800 p/m in SE England and with a smaller mortgage we wouldn't be able to afford anything! We're looking at a similar move, up to £250,000 with a 20% deposit of £50k.

OP - I suggest booking an appointment with a whole-of-market financial advisor. I met with one last week and it helped me the verify that I was on the right track with figures.

As an example, repayments were under £1k per month with the best rates on offer, on a 3 year fixed.

Now if you take the mortgage over 30 years you may find the mortgage company say NO as you need proof of income when 67 years old.
You will also have the problem of paying very little off the mortgage in the first couple of years if you take a 30 year term!!

We were actually told that if you're good with money then going for 30 years would be fine (although we're 28/26 y/o). Just because it's 30 years doesn't mean it has to take that long to repay .

We're currently overpaying on the mortgage and would look to do the same if we went from 25 to 30 years. We can still overpay each year but if for some reason we need a small amount of savings for something like replacing the boiler then this can come in handy, otherwise it can be used on the mortgage.

Tancred

olympicsmummy wrote: »

Ok so I've done so much research and feel more unsure now than before I did my research as there's so much info and so many options out there.

Our basic stats are I am 30, partner 37. We have joint income before tax of £52 000. We have deposit of £50K and house we are buying is £260 000

Ideally we don't want to pay more than £1100 a month on repayments.

1. Should we go for fixed or variable?
2. Over 25 or 30 years?
3. What interest rate is a good deal? 3?
4. which bank/bs etc to go with??

Firstly I would reduce your maximum payment of £1,100 - current rates of interest are rock bottom and they can only go one way: up.

My personal view is to get a long term low rate and stick to it instead of going for a fixed short term one and have to remortgage every 2 years. Too much hassle. The HSBC is doing some good rates at the moment, otherwise look at a broker such as London & Country.

Given that your partner is 37 I don't think a 30 year mortgage would be possible - many lenders don't want to lend to anyone who would be over 65 when the mortgage ends. I think a 27 year term would make the most sense.

anotherginger

retepetsir wrote: »

Unfortunately that's not possible for everyone. Our current mortgage is £800 p/m in SE England and with a smaller mortgage we wouldn't be able to afford anything! We're looking at a similar move, up to £250,000 with a 20% deposit of £50k.

I'm well aware of that but the OP was asking pretty basic questions and keeping mortgage payments low is pretty basic advice! I am also aware 1100 per month is affordable. At the minute we have a 600 per month mortgage (3 bed detached), and pay 600 per month on rent where I work in the SE (one bed flat), plus two sets of council tax and bills.

I have also seen lots of redunancies in the past year alone, hence my comment that it would be useful to take into account what would happen on one salary. Only the OP knows their job security, but few of us have a crystal ball.

OP - let us know how you get on with the morgage calculators.