First mortgage, am I being thick?

[MajorMantra]

My lady and I are looking at buying a house for the first time (currently renting) and so naturally we're looking around at mortgage options. Some lenders are now offering mortgage terms up to 40 years, and as I'm 26 and my gf is 24, going that long is actually a possibility.

Now obviously you pay an eye-watering amount of interest if you actually take 40 years to pay off your mortgage, but is there any good reason why we shouldn't sign up to a 40-year with a lender that doesn't penalise for early repayments, on the assumption that we will pay it off in far less time?

As I see it, that way we'd be committed to a low monthly payment (which is good from a risk point of view, for example in the event that one of us lost their job), but we'd be able to overpay to clear the debt much sooner than the end of the loan term.

Thoughts?

Cheers!

Edited by MajorMantra on Sunday 31st January 16:01

[MajorMantra]

Good grief, is this a PH consensus? Unheard of!

audi321 said:

Why not look at an Offset mortgage? Any surplus cash just throw in the offset account

Hadn't even considered it. I'll investigate, but I suspect the choice of deals isn't as good with offset mortgages.

[MajorMantra]

Thanks, this is all helping. The best offer I'm looking at right now is a First Direct 5 year fix that appears to offer unlimited overpayment, although I'll be going through the terms in great detail before committing to anything.

Playing with an overpayment calculator is certainly eye opening: an extra £400 a month on this deal for example almost halves the length of the loan. It puts into perspective all the little things I waste money on, but then I don't want to live the life of a pauper until my house is paid for...

[MajorMantra]

DonkeyApple said:

I find that whenever I want to buy something that if I consider that the item in buying is only really worth a few pence and that I'm really just paying someone else's shop rent and the rest is tax that I suddenly don't really want the item any more.

I'm not a skinflint but the absolute best thing I've ever done in my life was to clear my first mortgage in my 20s and the second one by my mid 30s. Obviously while rates were higher back then the loan sizes were much smaller but to have been debt free for nearly a decade is unimaginably wonderful that I'd always recommend trading a thousand pointless purchases of things that you have absolutely no need of and will probably just be stting out a few hours later for monthly overpayments to be debt free while your peers are still slaving away but with vague memories of a thousand extra beers and burgers or a slightly higher spec bland commuter car. Obviously, the over spenders will tell you that they might die tomorrow but statistics show that you and they won't be dying anytime soon and that when you're 60 you'll be living the life of Riley while they'll be facing 15 more years of toilet cleaning to make ends meet after being laid off at 50 for being too old and slow.

All true, but you have to draw the line somewhere. I'm careful with money: I have savings and no debt of any sort, but I don't feel guilty about treating myself to small luxuries like spending a fiver on a hot meal for lunch once or twice a week.

On the other hand, I definitely didn't need to buy an MX-5, but I did that anyway...