Longer mortgage with lower monthly costs if not buying a "forever" home?

WanderingAntelope

Hi all, first time buyer here

If I plan to stay in a property for around five years max, is it better to have a longer mortgage with lower monthly costs (approx 30 years at £400) than a shorter one with higher monthly repayments (19 years at £495)?

I don't think my payments would make a dent in the £75,000 I'm borrowing either way in that time frame, so would I be paying more unnecessarily if I took a short mortgage with higher payments?

Thanks,
WA

housebuyer143

WanderingAntelope said:

Hi all, first time buyer here

If I plan to stay in a property for around five years max, is it better to have a longer mortgage with lower monthly costs (approx 30 years at £400) than a shorter one with higher monthly repayments (19 years at £495)?

I don't think my payments would make a dent in the £75,000 I'm borrowing either way in that time frame, so would I be paying more unnecessarily if I took a short mortgage with higher payments?

Thanks,
WA

You are not paying more as you pay off more capital, so you get back what you put in capital wise when you sell (as long as the value is the same or more).
I personally choose the longest term, with the lowest payments and make over payments if I want. You never know what might happen and can always over pay, you can't under pay. 

theoretica

What would you do with the £95?  Spend it on stuff with nothing much to show at the end?  Put it in a savings account which pays more interest than you pay to borrow on the mortgage? 

5 years of 95 a month is £5700 - a sum worth thinking reasonably carefully about what you do with it.

MattMattMattUK

Choose the one with the lowest rate of interest and pay as much off as possible, overpay every month you have spare funds, that is the best option as then in five years time you will have more equity for your next property. 

ACG

Ive just gone on to an overpayment calculator on the natwest website
I have no idea how accurate it is, but it seems to suggest the balance of your mortgage would be around £6k lower at the end of 5 years... If you do not see that as significant, I am happy to take it off your hands :-) 

RelievedSheff

You will be paying a damn sight more interest on the 30 year mortgage than the 19 year one.

BikingBud

RelievedSheff said:

You will be paying a damn sight more interest on the 30 year mortgage than the 19 year one.

Absolutely!

Purely on the basis that the debt is cleared in <2/3 of the term indicates it has a significant impact by opting for 19 years.

But as others have pointed out what is your real intent, long-term min payment and get the cash to work hard elsewhere, potentially providing an excess, or clear the mortgage and have no housing debt.