Question: Can I reduce the term when applying for first mortgage?

yllah

Hi all,

Just a question that I would like some expert opinion on please.

Will be applying for a mortgage this summer and between us are annual salary is 41k and we are looking at around the 100k mark so affordability won't be an issue. (No debt or anything)

I've just been looking at the monthly payments and we could pay a lot more a month realistically. As a FTB is it better to apply for a 25 year mortgage then make overpayments? (We wouldn't overpay more than 10% of the outstanding amount)

Or the other option - could we apply for say a 22 year term which would increase the monthly payment then make smaller overpayments if we do have the money??

Just worried than reducing the term and increasing the payments may reduce are chance of acceptance???

Thank you!

amnblog

Sounds like you can afford a shorter term.


This matter can be discussed at the time with whomever is advising you.

nidO

Having a shorter term and therefore higher monthly payments will only affect your chance of acceptance if the higher monthly payment is at a level the bank deems unaffordable, which whoever it advising you should be able to tell you.

If you're happy to make overpayments and the bank allows upto 10% overpayment, having a longer term with lower monthly payments then overpaying does give you flexibility in that you can lower your payments in the future if your circumstances change.

yllah

Thank you both for your advice. Due to this being our first purchase we are wanting to make sure the affordability is well within are limits and we have plenty flexibility.

Key thing I am looking at is overpaying as much as possible in the first few years to keep interest charges down but also hopefully build up some good equity for when we come to re-mortgage.