30 year mortgage - much worse than 25 year?

Thrugelmir

Jack_Johnson_the_acorn wrote: »

I don't rate Thrugs point,

The OP has stated that they'll be financially stretched on a 25 year term. Extending the term does nothing to reduce this risk.

Jack_Johnson_the_acorn

Thrugelmir wrote: »

The OP has stated that they'll be financially stretched on a 25 year term. Extending the term does nothing to reduce this risk.

So flexibility is what they need. Being restricted to a higher minimum payment is not what they need. Although I understand your point, they can make overpayments on the longer term. Assuming that they aren't financially naive and can make make overpayments on regular basis.

shortchanged_2

HAMISH_MCTAVISH wrote: »

The trend for a small minority of mortgages to extend to 30 year terms is also likely an unintended consequence of stress testing to 7% rates under MMR.

These will be people who could easily afford 25 year mortgages at 5% to 6%, but just fail the super-strict affordability test at 7%.

Hamish please explain how a 7% affordability test is super strict. In our lifetime interest rates have been as high as 15% although I know its unlikely to get that high again, but 7% is very possible so how can it be super strict.

Thrugelmir

Jack_Johnson_the_acorn wrote: »

Although I understand your point, they can make overpayments on the longer term.

Very easy to make assumptions. Those that end up in some form of financial difficulty tend to be overly optimistic in nature. Precisely why affordability is now assessed by lenders under MMR, on the basis of known facts. There's no speculation as to what may or may not happen in the future.

Jack_Johnson_the_acorn

Thrugelmir wrote: »

Very easy to make assumptions. Those that end up in some form of financial difficulty tend to be overly optimistic in nature. Precisely why affordability is now assessed by lenders under MMR, on the basis of known facts. There's no speculation as to what may or may not happen in the future.

You have to speculate what will happen in the future... That's what planning is. I don't get your post. Maybe you could explain what you mean.

shortchanged_2

Jack_Johnson_the_acorn wrote: »

You have to speculate what will happen in the future... That's what planning is. I don't get your post. Maybe you could explain what you mean.

Thrugs point is quite simple. Poor planning or as other people may call it 'ignoring the risks' can lead to a whole lot of trouble.

You could easily get the impression from some on here that interest rates will never go above 2% again. Basing decisions on something such as that could be seen as speculation.

Jack_Johnson_the_acorn

shortchanged wrote: »

Thrugs point is quite simple. Poor planning or as other people may call it 'ignoring the risks' can lead to a whole lot of trouble.

You could easily get the impression from some on here that interest rates will never go above 2% again. Basing decisions on something such as that could be seen as speculation.

So when you plan for the future, do you use a crystal ball? I don't possess that ability unfortunately, hence why I "speculate"using the available data, clearly one needs to consider all possibilities, hence a longer mortgage term means lower payments in case the worst does happen. I make overpayments equal to or greater than my regular mortgage payment. I'm speculating that rates will rise shortly...:)

dotdash79

Why not look towards 35 year and overpay like it's a 25 year mortgage. Then as your wage increases and inflation works away your debt you can remortgage your term downwards.

Thrugelmir

Jack_Johnson_the_acorn wrote: »

You have to speculate what will happen in the future... That's what planning is.

A reasonable possibility of failure as while risk can be assessed with regards to probability, uncertainty is unquantifiable.

Speculate = form a theory or conjecture about a subject without firm evidence.

Plan = a detailed proposal for doing or achieving something.

[Deleted User]

I'll tell you when my 33 year mortgage finally turns into a 30 year mortgage in December..

Seriously, it's a loan. The duration of it doesn't matter too much. I'd like to eventually over pay it so I can be mortgage free by 60. Whatever you do it's still better than renting