Mortgage cost over 2 years vs capital remaining (amortization)?

ThePants999

For SOME people, the amount they pay out over the two years IS the most important factor - they want to minimise their short-term outgoings. Bit of a silly default position IMO, though.

getmore4less

ThePants999 wrote: »

For SOME people, the amount they pay out over the two years IS the most important factor - they want to minimise their short-term outgoings. Bit of a silly default position IMO, though.

There are only 3 variables anyway.

The 2 key ones are the amount you borrow and the rate, they determine the interest.

With low rates the cost of delaying capital payments is relatively low.

£100k @ 3% interest only, £250pm

if you look at repayment over a given period and the cost of delaying the capital by 2 years( followed by the different monthly payment)

40/38 £71,833/£73,715 £358/£368
30/28 £51,778/£53,930 £422/£440
25/23 £42,264/£44,557 £474/£502


For many the future income profile means delaying the capital payments to do other things is good value as the mortgage debt is likely to be the cheapest borrowing they can get.

catching up is also not that expensive to have a 2y interest only cost the same as the 25y term needs a payment of £522 after the 2 years.