25 years or longer?

tea_n_toast

I spoke to a MB about a property that's on at offers over £67k. It was just a preliminary chat and I got a MIP at the end of it but he asked me how many years we'd want the mortgage over ...

Obviously I know that the longer the mortgage the lower the repayments but more interest?
We are young 22/25 so plenty time ahead of us HOPEFULLY.
But what's the best thing to do? Our mortgage will be at least £100 less than our rent anyway but is it worth trying to get the monthly payment even lower to be able to save a little for home repairs etc?

Thanks

~Beanie~

Personally I would go for 25 years. Less to repay overall and it gets paid off quicker.

shaneshaneshane

If you have restraint you could always opt for the longer term then make overpayments (check mortgage terms etc to make sure you are allowed) that way you will have flexibility (as it sounds like you have no back up savings judging by your last line) if a big bill comes in, for example, car failing mot, boiler breaking etc to make a much lower monthly payment.

Of course, as per standard, I would initially advise building up some back up funds if you don't have any with the extra cash you will be saving.

tea_n_toast

Thanks both.
Seems there's pros to both options then really!
I'm keen on the idea of overpaying in general anyway but obviously building up some savings is a top priority, it's difficult ATM in very expensive rented accommodation but we are hoping outgoings will drop slightly when we get a mortgage so it will be more of an option to build something for a rainy day.

Thanks!

pinkteapot

I prefer to go with the longest term possible but then overpay. It means that your repayment is lower in case life throws up any problems!

As above, it does take discipline. But I now think of my standard repayment as being like a "minimum repayment due" on a credit card - you never want to only pay that.

Do be aware that some products have a limit on overpaying - usually during the offer rate period (eg first five years of a five-year fix).

Jonesy88

I'm 26 and have just signed a 28 year deal.

How I see it is that we'll still have a good few years of no mortgage before retirement age anyway. Our deal also allows for 20% overpayments without penalty so if we have extra, we can overpay. If not, we don't have to - I'd rather the choice.

tea_n_toast

That makes a lot of sense teapot!

I'd maybe need to work on the discipline side of things a little but we'd get there!

tea_n_toast

Great Jonesy! Does taking a longer or shorter deal affect your likelihood to be accepted do you know?

I just got quite excited by the fact that if we did take 25 years and overpay a little we'd be mortgage free by the time my partner was 50 (he's oldest) but that's not really a biggie and could still happen!

Madbags

I'm 27 and my partner is 25, we both just took a 25 year mortgage. The mortgage advisor recommended something like 14 years based on their computations but jesus the repayments were high.


The idea was to save money by moving from rented to our own house not spend more! So we were comfortable with 25 and that's kind of what we aimed for based on the experience of people we know.

kingstreet

You have to go for a term which is affordable.

That means the combination of the term, your income and outgoings entered into the lender's affordability calculator produces a figure at or above the amount you wish to borrow.

Once you've achieved that, you then have to decide whether you go for;-

the shortest affordable term acceptable to the lender and repay the mortgage as quickly as you can to save interest

or

a term which produces a comfortable monthly payment on which you can tackle emergencies and on which you could overpay voluntarily to reduce the interest you pay.

It's very much down to each individual to decide which suits them best.

Old_Git

If you go for a fixed deal or discount deal ,when that expires you can change lenders and your options .