9 year vs 30 year mortgage

Dird

I'm currently on a 9 year mortgage (1.54%) but phoned Today asking for them to extend me on a 30 year length thinking it would be more financially beneficial but it now looks to not be the case. Am I right in being previously wrong?

Assuming a start of £80k mortgage paid from this month (https://www.drcalculator.com/mortgage/uk/) I got these figures:
30 years
£277.63/month
2016: £1,214.40 interest
2017: £1,181.57 interest
remaining: £75,557.78

9 years
£793.73/month
2016: £1,162.50
2017: £1,032.81
remaining: £62,454.62

2016: £52 mortgage interest increase with 30 years
2017: £149 mortgage interest increase with 30 years
£6192 @ 3% = £101 bank interest at £516/month
year 2 = £292.98 bank interest at £516/month

Because the bank interest was higher than the mortgage interest I thought it was better off but if I threw all the savings at the mortgage at the end of 2017 I'd have £62,779.13 outstanding compared to £62,454.62 at the shorter term?

Edit: even with 6% regular savers it seems I'm better off with the shorter term =/ what a nub

Prothet_of_Doom

I do these sorts of sums on a spreadsheet.

It's clear that IF you can afford to pay £800 a month instead of £280 a month, the amount will be £100K vs £86K

But that assume the interest rate stays at such a low rate. Personally having once paid 15.5% I can't believe that over the next 30 years it will stay at 1.54%. I'd pay as much off as possible whilst not making my life a misery.
Perhaps there is a compromise? what about: 15 years £500 a month £89K total.


http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results

Dird

Prothet_of_Doom wrote: »

It's clear that IF you can afford to pay £800 a month instead of £280 a month, the amount will be £100K vs £86K

I forgot to mention a big point which is that regardless of length I still aim to clear it in 2020.

Edit: I'm happy to say that I was initially right. The bank interest should outweigh the mortgage interest as initially thought. The reason I had it wrong above was because I started from this month but only took calculations from 2016-2017 so there was a £500 missing

TCA

Dird wrote: »

I'm happy to say that I was initially right. The bank interest should outweigh the mortgage interest as initially thought. The reason I had it wrong above was because I started from this month but only took calculations from 2016-2017 so there was a £500 missing

Not sure you need all the calculations. If your alternative to paying the mortgage is getting bank account interest, then it's a straight comparison of mortgage rate versus bank interest rate (net rate if you're a basic-rate taxpayer). Worth also noting that from April the situation changes slightly with new savings interest allowances coming in.

Dird

TCA wrote: »

Not sure you need all the calculations. If your alternative to paying the mortgage is getting bank account interest, then it's a straight comparison of mortgage rate versus bank interest rate (net rate if you're a basic-rate taxpayer). Worth also noting that from April the situation changes slightly with new savings interest allowances coming in.

It was to justify extending my mortgage. They're being really awkward about it as I've only had one month paid (it's been sent to underwriters to see if they will). Can see why they'd review a shortened duration but not an extension

TCA

Dird wrote: »

It was to justify extending my mortgage

Extend on what basis though? At a variable rate presumably? Your calculation assumes you can fix at 1.54% for 30 years - really?

Wouldn't there be fees to exit your current fixed deal?

If you're intending to pay it all back in 2020 why would you want to extend the term under presumably less favourable terms?

Dird

TCA wrote: »

Extend on what basis though? At a variable rate presumably? Your calculation assumes you can fix at 1.54% for 30 years - really?

Wouldn't there be fees to exit your current fixed deal?

If you're intending to pay it all back in 2020 why would you want to extend the term under presumably less favourable terms?

It will remain a 2 year fixed but with a total length of 30 years rather than 9. Then in July 2017 I'd switch to a 3 year fixed then hopefully pay it off once it flipped to variable