Mortgage scenario -overpaying on differing mortgage terms

collinsca

Thanks for taking the time to do the above.

Sorry im being a bit thick perhaps... re hitting the overpayment limit in year 7 im not sure what we are saying here.. i thought i could still overpay (with Nationwide at least) up to 10% of loan.. 

or is the 7yr limit based on not incurring any ERCs?

many thanks

dimbo61

I hope Nationwide say 23/25 is your limit for the mortgage term.
Do you really want a mortgage till your 75 ?

You get your state retirement pension  at 68 
They may ask for proof of pensions if you ask for a mortgage past 68.

collinsca

dimbo61 said:

I hope Nationwide say 23/25 is your limit for the mortgage term.
Do you really want a mortgage till your 75 ?

You get your state retirement pension  at 68 
They may ask for proof of pensions if you ask for a mortgage past 68.

I said 30yrs on the forum to see if that could make it cheaper in the long run - it's been said now that term doesnt impact the cost,

The aim of this post is to overpay; so whatever mortgage product i choose i'll overpay and im conscious ERCs come into play - so whilst i may take out a 10yr fixed i'll probably get that paid prior and pay the ERCs

getmore4less

collinsca said:

Thanks for taking the time to do the above.

Sorry im being a bit thick perhaps... re hitting the overpayment limit in year 7 im not sure what we are saying here.. i thought i could still overpay (with Nationwide at least) up to 10% of loan.. 

or is the 7yr limit based on not incurring any ERCs?

many thanks

If they reset the normal payments your annual overpayment goes over £5k in year 7.

In the back of my head I think nationwide will probably keep the payment the same so you don't hit it.

Even if you do it won't change much by then savings rate will be higher than your mortgage anyway according to the rates can only up people.

Thrugelmir

collinsca said:

dimbo61 said:

I hope Nationwide say 23/25 is your limit for the mortgage term.
Do you really want a mortgage till your 75 ?

You get your state retirement pension  at 68 
They may ask for proof of pensions if you ask for a mortgage past 68.

I said 30yrs on the forum to see if that could make it cheaper in the long run - it's been said now that term doesnt impact the cost,

The term always impacts the cost. The longer you borrow the money for the more interest you'll pay.  The greater the amount you'll repay in total in settling the debt.  

collinsca

getmore4less said:

collinsca said:

Thanks for taking the time to do the above.

Sorry im being a bit thick perhaps... re hitting the overpayment limit in year 7 im not sure what we are saying here.. i thought i could still overpay (with Nationwide at least) up to 10% of loan.. 

or is the 7yr limit based on not incurring any ERCs?

many thanks

If they reset the normal payments your annual overpayment goes over £5k in year 7.

In the back of my head I think nationwide will probably keep the payment the same so you don't hit it.

Even if you do it won't change much by then savings rate will be higher than your mortgage anyway according to the rates can only up people.

thanks - i think you can choose to lower the monthly payment or keep it the same if you make a £500 overpayment or more.

getmore4less

Thrugelmir said:

collinsca said:

dimbo61 said:

I hope Nationwide say 23/25 is your limit for the mortgage term.
Do you really want a mortgage till your 75 ?

You get your state retirement pension  at 68 
They may ask for proof of pensions if you ask for a mortgage past 68.

I said 30yrs on the forum to see if that could make it cheaper in the long run - it's been said now that term doesnt impact the cost,

The term always impacts the cost. The longer you borrow the money for the more interest you'll pay.  The greater the amount you'll repay in total in settling the debt.  

The true term and cost is determined by the actual payments not the payment you contract.

The op will have this done and dusted in ~9years with £500pm 

Sistergold

Thrugelmir said:

collinsca said:

I plan to overpay the mortgage, i plan to overpay -  i plan to pay a total of £500 per month...

Based on this, what would be the best option? 

Take the mortgage out over a much shorter term say 10-15 years.  Doesn't much sense to take a 30 year term and overpay by £500 a month. 

Yes also thought this, 25/30 year term for £50k also 10year fix when you can overpay by £500? The term, and the length of fix seems excessive for the mortgage amount and what you plan to overpay so maybe review that.

Snookie12cat

getmore4less said:

Thrugelmir said:

collinsca said:

I plan to overpay the mortgage, i plan to overpay -  i plan to pay a total of £500 per month...

Based on this, what would be the best option? 

Take the mortgage out over a much shorter term say 10-15 years.  Doesn't much sense to take a 30 year term and overpay by £500 a month. 

Until the day you need that extra for something and can't reduce the payment.

Flexibility trumps term every time.

Agreed! I don't need to have my house on interest only, but I pay for the flexibility to have money free to do what I want with. 

I can over pay should I wish to but I don't have to. Should the worst happen and I lose all my income I only need to find £200 a month, which is significantly easier than £800. 

BikingBud

Snookie12cat said:

getmore4less said:

Thrugelmir said:

collinsca said:

I plan to overpay the mortgage, i plan to overpay -  i plan to pay a total of £500 per month...

Based on this, what would be the best option? 

Take the mortgage out over a much shorter term say 10-15 years.  Doesn't much sense to take a 30 year term and overpay by £500 a month. 

Until the day you need that extra for something and can't reduce the payment.

Flexibility trumps term every time.

Agreed! I don't need to have my house on interest only, but I pay for the flexibility to have money free to do what I want with. 

I can over pay should I wish to but I don't have to. Should the worst happen and I lose all my income I only need to find £200 a month, which is significantly easier than £800. 

Who are you paying £200 per month to?

Snookie12cat said:

Rent near me is £1000 a month. I have no mortgage. 

It might work for others but due to no mortgage the numbers would never add up doing that. 

??