So i have to take a 40 year mortgage to get the loan i need, bad idea?

Thrugelmir

topcat007 wrote: »

I would stick to it very disciplined with these things they are not to be messed with.

Words are the easy part. Breaking the vow takes seconds. Life is a roller coaster. As much as you plan you have to expect the unexpected.

getmore4less

IF you are so frugal you should have a decent deposit and be saving loads each month, that will demonstrate affordability when the time comes.

pinkteapot

Let_Us_See wrote: »

The longer the term the more interest you pay.

Only if you don't overpay.

OP - only you know how disciplined you are. We overpay by £1,500 for ten months each year. The other two months, that money goes into a pot that funds our holiday and certain annual costs that we don't budget for monthly. We stick to it, and overpay rather than go on extra holidays.

We took our mortgage out over the longest term we could (28 years in our case) but aim to pay it off in half that time. Having a long term has one major benefit - the standard monthly repayment is lower so if you have a setback - lose a job or get ill - your minimum monthly cost is lower which may help. As Thrugelmir said, the unexpected can happen. Longer term = more flexibility if things do go wrong.

We find it easy to stick to overpaying. We think of the standard monthly repayment as being like the 'minimum amount due' on a credit card bill.

muh3

Hello, I had a similar start 4 years ago.

Lender was only giving me 35 years, no less. 2 year fixed 5.99%
Payment about 950£ fist payment was 830£ interest alone. I did overpay about 8000£ during the 2 years.

Remortgaged after this, because of the higher LTV I been given 2.99% fixed 2 years. paying now 990£ but reduced the term to 17 years.

Now due to remortgage again soon. Hopefully getting 1.99% fixed again and able to reduce the term another 2 years to 13 years without paying much more.

Go with the 40 years, overpay and see what you are able to do then you remortgage.

meer53

topcat007 wrote: »

Hello all,

so after playing with Nationwide "Affordability Calculator" i have to take a loan for 40 years to get the loan amount i want. I know for I can pay this in 25 years or less as i am quite savvy and they must be using very high averages of spending and assuming i have a car etc etc.

Is there any downfall to 40 years as this seems very extreme? I know i could overpay every single month to bring it down to 25 years, but is there any major issues or disadvantages to this length ?

I can see the massive advantage of having one month very low payment if i got desperate or in a mess for some reason.

Thanks for everyones help on here you all have been great!!

The downfall is, it's 40 years. Plus, it's ok looking on a calculator, you might not get offered a 40 year mortgage.

October_Starter

The best advise I would give is go to a mortgage advisor. Preferably one that doesn't charge you. They will give you the best mortgages based on your income and expenditure. You wouldn't have to necessarily go through them to get a mortgage but it would definitely give you an idea of what is available to you.

October xx

northerner999

If you get a good rate with Nationwide, snap their hands off - especially if it is a long-term fix. You're getting hung up on something that is largely an irrelevance, because whenever your initial rate ends you will be free to reduce the term, change deal, make a payment or switch to another provider.

I initially took my mortgage out for 40 years when I bought in 2006 (pre-crash). I wanted the initial payments as low as possible so it meant it ran right up to retirement. I was happy and secure in my job and pretty certain I'd live in the property for a long time.

12 months later I'd quit my job and moved to the Middle East.

Let me tell you I was pretty grateful my monthly payments were as low as possible, as the rent I received did not cover it and I had to make up a shortfall from my salary. You sound like a FTB, it's very easy to under-estimate possible payments. I needed a loan to carpet my flat, for instance, as it was new build!

I have just remortgaged for a second time since moving back to the UK and back into the flat. Each time I have paid a lump sum to get a better rate but left the term as it is so I have as much financial flexibility as possible.

If you are as financially savvy as you come across, you'll be able to maximise overpayments (mine is 10% of remaining term per calendar year - are you really going to want to overpay by more than that?) without penalty and save any extra cash for when your deal ends. Then you will have lots of options, including reducing the term if.you want.

As I said, my advice is to take the rate if it matches what you want. If you are financially smart you'll be in a strong position when the deal ends.