lower mortgage term?
katie4
Posts: 430 Forumite
Hi
We bought our first house 5 years ago and our fixed term is coming to an end (25 years)
iv looked at the mortgage calculator and the remaining balance over 20 years is £285pm but over 15 years it is £360 - this is what we are currently paying per month now
would it not make more send to go for the 15 years istead? getting it paid off quicker? interest is 2.33%
thanks
:j:j:T:money::T:j:j
I am 30 and hoping to be mortage free by 40!
We bought our first house 5 years ago and our fixed term is coming to an end (25 years)
iv looked at the mortgage calculator and the remaining balance over 20 years is £285pm but over 15 years it is £360 - this is what we are currently paying per month now
would it not make more send to go for the 15 years istead? getting it paid off quicker? interest is 2.33%
thanks
:j:j:T:money::T:j:j
I am 30 and hoping to be mortage free by 40!
0
Comments
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Hi
We bought our first house 5 years ago and our fixed term is coming to an end (25 years)
iv looked at the mortgage calculator and the remaining balance over 20 years is £285pm but over 15 years it is £360 - this is what we are currently paying per month now
would it not make more send to go for the 15 years istead? getting it paid off quicker? interest is 2.33%
thanks
:j:j:T:money::T:j:j
I am 30 and hoping to be mortage free by 40!
Generally people advise that you keep the term the same and make overpayments instead. That way you can still pay it off earlier but also stop making the overpayments if you come into financial difficulty. If you shortern the term then you are stuck with the higher payments regardless of situation.0 -
Generally people advise that you keep the term the same and make overpayments instead. That way you can still pay it off earlier but also stop making the overpayments if you come into financial difficulty. If you shortern the term then you are stuck with the higher payments regardless of situation.
Hi sorry how do you mean stuck with the payments? as in what situation? thanks0 -
Hi sorry how do you mean stuck with the payments? as in what situation? thanks
So for example someone could either:
1. 25 yr term, £500 per month mortgage plus £500 per month overpayment
2. 15 yr term, £1000 per month mortage
Both options would have the mortgage paid off in the same amount of time, however if they were made redundant with option 1 they could stop making the overpayments.. if they had gone for option 2 then they're forced to keep paying the full £1000 per month.
Basically by not reducing the term you are giving yourself the flexibility should you need it in future.0 -
So for example someone could either:
1. 25 yr term, £500 per month mortgage plus £500 per month overpayment
2. 15 yr term, £1000 per month mortage
Both options would have the mortgage paid off in the same amount of time, however if they were made redundant with option 1 they could stop making the overpayments.. if they had gone for option 2 then they're forced to keep paying the full £1000 per month.
Basically by not reducing the term you are giving yourself the flexibility should you need it in future.
Thanks for explaining that
Both our jobs are secure and I can't really see that changing at all
For £75 difference in monthly payments i think it would be fine as we're not in a position to overpay at the moment
i did enquire about overpaying previously but was informed it would have to be 3x the monthly amount0 -
Thanks for explaining that
Both our jobs are secure and I can't really see that changing at all
For £75 difference in monthly payments i think it would be fine as we're not in a position to overpay at the moment
i did enquire about overpaying previously but was informed it would have to be 3x the monthly amount
You're coming to the end of your fixed term so I assume you'll be looking at other mortgage providers? All the major ones I've encountered allow you to make any amount of overpayment with some only limiting you to 10% of the outstanding balance per year.0 -
You're coming to the end of your fixed term so I assume you'll be looking at other mortgage providers? All the major ones I've encountered allow you to make any amount of overpayment with some only limiting you to 10% of the outstanding balance per year.
We're looking at doing a rate switch with current provider (no credit checks involved in this)0 -
It depends on your attitude to money.
I shortened my term. Our employment is stable and we've made sure weve got buffers. The temptation to choose to buy something at a whim at the expense of the mortgage is, well, too tempting.
You shouldnt have to overpay 3x the amount.0 -
Thanks iv found the email i received which says
based on your current product deal you cannot overpay but you can make capital payments of up to 10%PA which is 3 times monthly payment0
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