Would we get a mortgage?

Tigie

Hi Everyone,

Me and my gf are currently living at our parents and we will be buying our own home in the middle of 2016.
We have a deposit of 25k, purchase price will be about 160k . Our total monthly income after tax is £2,800 (we have no monthly bills). What I would like to do is have the mortgage over a 12 year period which works out about £1,150pcm , do you think this will be OK or will we have problems?

Many Thanks

Thrugelmir

Why such a short period of time?

Have you fully budgeted for all potential outgoings?

Is your assumption that interest rates will remain at current levels for the next 12 years?

Tigie

Hi, worked it out at 3% interest rate we would save £31000 by paying the mortgage off in 12 years rather then 25 years .
Yes I've budgeted and believe we could do it. Just not sure what the mortgage lenders criteria is?

_CC_

Tigie wrote: »

Hi Everyone,

Me and my gf are currently living at our parents and we will be buying our own home in the middle of 2016.
We have a deposit of 25k, purchase price will be about 160k . Our total monthly income after tax is £2,800 (we have no monthly bills). What I would like to do is have the mortgage over a 12 year period which works out about £1,150pcm , do you think this will be OK or will we have problems?

Many Thanks

You will have monthly bills when you buy a house, though. Council tax, water, energy, food, upkeep etc???

Unless I have my figures wrong, your £1,150PCM repayment is also assuming a ~3% mortgage rate for the next 12 years...

Thrugelmir

Tigie wrote: »

Hi, worked it out at 3% interest rate we would save £31000 by paying the mortgage off in 12 years rather then 25 years .
Yes I've budgeted and believe we could do it. Just not sure what the mortgage lenders criteria is?

Have you found a 10 year fixed rate mortgage at 3%?

Pixie5740

There's nothing stopping you from getting a mortgage with a longer terms which allows you to make overpayments without penalty. That would give you more flexibility.

Tigie

Thanks for the reply's, the best rate I found was The Coventry 2.15% variable, I know it can go up but can always fix in the future.
I've not found any mortgage that will allow me to overpay by more than 10% without penalty, so it's not worth it long term.

[Deleted User]

Have you checked all three versions of your credit files? Best to do that first to check there's nothing there that would stop you getting your pick of the rates.

Tigie

Hi, yes luckily we both have excellent credit scores so that's one less thing we have to worry about lol.

JimmyTheWig

Tigie wrote: »

Thanks for the reply's, the best rate I found was The Coventry 2.15% variable, I know it can go up but can always fix in the future.

If you wait for rates to start going up before you fix, the chances are that you'll find available fixed rates are higher than they are today.

I've not found any mortgage that will allow me to overpay by more than 10% without penalty, so it's not worth it long term.

Overpaying by 10% of the mortgage balance should be plenty to clear a 25 year mortgage in 12 years.

Tigie

Overpaying by 10% of the mortgage balance should be plenty to clear a 25 year mortgage in 12 years.[/QUOTE]

Can you explain to me how I could do this? If I had a mortgage of £135,000 over 25 years @3% that would be £640pcm so extra 10% is £64, so over 25 years would save me about £8000 and only reduce my mortgage by 3 years.
If I do a 12 year mortgage I would save about £31000 in interest without even overpaying, or am I working this out all wrong?
Thanks