30 Year Mortgage Terms

EsJay

Hi,

Currently have a LTV of 23% on current property and looking to move and purchase somewhere more expensive. With purchase and renovations costs, would need to increase mortgage from current £185k to approx £310k, new LTV would be around 30%. Bank have agreed this amount and quite a bit more in principle.

Given the ratio is still low on the new property but the sum is a fair increase, I'm looking at keeping the monthly costs down as much as possible so have considered a 30 year term for the new mortgage. Upside is lower monthly repayments, possibly being able to borrow more whereas the downside is more obviously borrowing more but rates are cheap and the property (in London) should at least retain near its current value. Prospective property value is approx £940k.

I'm not fixed on paying off the mortgage ASAP, even with the existing mortgage it could take another 20 years, and could see selling the property in 10-15 years taking the remaining profit.

So what are opinions on 25 vs 30 year terms in such a scenario please? Naturally I'd be cautious and go 25 years and lower sum but this could jeopardise either the purchase or ability to renovate so maybe the best idea is just go high and long?

Hope this makes sense, happy to clarify any points and interested in views/experiences.

SJ

amnblog

Shorter terms are always best advice.

If you are over 40 you may not have the option with all lenders.

Thrugelmir

If I was to prepare a 20 year business plan I would assume the worst possible set of circumstances and work from there. Although the odds of a recession are slim. Recessions do happen. Therefore being overly optimistic could prove extremely expensive.

hcb42

i cannot imagine taking on a 30 yr term with such a LTV...it's an horrendously long time. At least look at 20.