Please help me with the total cost of a mortgage!

dahlia1989

Hi there,
This is my first post- so sorry if it's a bit muddled! The other day my friend started getting really irate about the banks and began claiming that mortgages cost double or triple the value of a house.. having a partner with his own mortgage (who attended appointments etc with) and having look at a mortgage of my own I was sure that this was not the case. When I got home I looked on several to mortgage cost calculators (Including the money saving expert one) and double checked in case I was wrong. It confirmed that the total mortgage cost across the whole term was maybe a quarter or a third of the house's value (maybe a third of the borrowed amount). I pointed this out to her (probably unwisely) and she got even more irate and claimed I must no nothing about mortgages or what the banks currently offer!

My partner's rate is 3.59% on a 5 year fixed for 25 year term, I input this into the full cost calculator and the total cost was about £52000 in interest plus the borrowed amount and fee. Am I missing something here? She's so absolutely convinced she's correct, I feel like I'm going mad!

flashg67

I'd say you're correct. Assuming the interest rate stays the same, a repayment type 25 year mortgage for 100k would cost you round 150k in total at the rate you've used.

I don't know which calcultor you showed your friend. but this one is as simple as it gets -

http://www.thesalarycalculator.co.uk/mortgages.php

dimbo61

Well she could be !
Now a " Normal " mortgage used to last 25 years but many borrowers are not taking 25/30 and even 35 year terms due to affordability.
Interest rates can be as low as 1.99% for a 5 year fix if you have 40% deposit.
Some borrowers are paying 5.99% on a 95% mortgage or even more !
Now 10 years ago we took out a fix at 4.74% ( one of the best on the market at the time ) with a 50% deposit.
Over 30 years we would have paid 200% of the amount we had borrowed to the lender. We overpaid and have now paid off our mortgage.

betmunch

The total cost of the mortgage assuming no interest rate changes and no overpayments is clearly stated in the KFI you get before applying. Its no secret how much the total is.

Also mortgages are generally the cheapest form of borrowing you can get.

I dont know what your friend is getting upset about. No one is forcing her to take a mortgage.

amnblog

The total due to be paid is shown in the summary of payments at the end of the mortgage illustration.

Everyone moans about how much it costs when they get accepted, or why they have been refused when they don't.

TCA

I suppose if you had an interest-only mortgage at say 4% for 25 years, then you'd be paying 100% interest, so double price. More realistically, most people are on repayment mortgages these days, which would make the above example redundant.

Thrugelmir

dahlia1989 wrote: »

My partner's rate is 3.59% on a 5 year fixed for 25 year term, I input this into the full cost calculator and the total cost was about £52000 in interest plus the borrowed amount and fee. Am I missing something here? She's so absolutely convinced she's correct, I feel like I'm going mad!

The interest rate is unlikely to be 3.59% for the entire term.

Put in 6% as that may be more indicative of the amount eventually repayable.