Agreement in principle

Sncjw

Hi

I’ve just done an agreement in principle for a mortgage but it says it’s based on a term of 39 years and if I want to shorten the term they would likely offer me lower than the amount stated.

I’m worried that I won’t be able to get a mortgage on my own.

Please help.

ACG

You do not need to do a DIP to check affordability. Just use the affordability calculators.

The DIP has been agreed over a term of 39 years so you can get a mortgage. You can also usually overpay the mortgage to bring the term down.

kevChan

Basically, as a principle to get onto housing ladder,
I would ALWAYS GET THE LONGEST TERM (REPAYMENT, NOT INTEREST ONLY) mortgage.

Say, if your mortgage repayment monthly is £400 with your 39 year term,
compare to £500 with a 30 year term,
because you can overpay, you should choose £400- 39 year term,
and simply pay £100 monthly extra yourself.

This allows you to HAVE THE CHOICE of not paying the £100 if in time of need,
and if you do the math, it would actually shorten your mortgage term to around 30 years anyway!

Having the OPTIONs are important in mortgage! One is called Early Repayment!
Term does not matter (unless you are those people who only pay the fixed amount agreed!)

clemmenza

I agree with kevChan, just make sure that you are allowed to make overpayments with the product that you choose! I have a long mortgage term: hate seeing the numbers, but am overpaying so that it will, in effect, be reduced.
I've just done a rough comparison: on the longer term (33 compared to 25 y) I would pay back an extra £900 or so... worth the £4 pm for the option, in my opinion!
Good luck!

ACG

The only problem with KevChan' suggestion is that there is always something else for you to spend that £100 on - TV, holiday, clothes, the kids etc.

I think in 5 years I have only seen 2-3 people make regular overpayments to their mortgage compared to almost everyone wanting the ability to make overpayments.

I am guilty of the above, I did mine over 35 years as I am self employed and have good and bad months. I always said I would overpay in the good months but in almost 2 years, I have not overpaid once.