Mortgages - Where to start?
Discussion
I'm finally looking at getting on the property ladder. I'm fortunate enough to have a large enough deposit that I "only" need to borrow around £50k whilst from the little bit of rooting around that I've done most places seem to suggest they'll lend me around £175k, which seems kind of insane but there you go.
In general terms with a "small" mortgage like this would you go with a longer period to get a low repayment but keep saving so you have "money in the bank" to cover emergencies but with a view to paying the mortgage off early, or would you simply go for a shorter term to start with?
I'll emphasise that I have literally just started looking so I'm going off the likes of Money Supermarket. I have not spoke to anyone yet and naturally I'm just after opinions - I'm sure as heck not about to take any replies here as being gospel
Apologies if I sound somewhat naive here - truth is I am with this
In general terms with a "small" mortgage like this would you go with a longer period to get a low repayment but keep saving so you have "money in the bank" to cover emergencies but with a view to paying the mortgage off early, or would you simply go for a shorter term to start with?
I'll emphasise that I have literally just started looking so I'm going off the likes of Money Supermarket. I have not spoke to anyone yet and naturally I'm just after opinions - I'm sure as heck not about to take any replies here as being gospel
Apologies if I sound somewhat naive here - truth is I am with this
Go for a flexible or offset mortgage, that way you can set your repayments at 25 years. Meaning if your circumstances change you won't feel too much of a pinch. You then save up extra in your other linked account, which reduces your interest but gives you access should you need it.
I took my offset mortgage with an 18 year term 5 years ago with 110k. It's now at 60k. I've overpaid, re borrowed for a new bathroom etc. at the rate I'm paying now should be finished in 6 years.
I took my offset mortgage with an 18 year term 5 years ago with 110k. It's now at 60k. I've overpaid, re borrowed for a new bathroom etc. at the rate I'm paying now should be finished in 6 years.
Moominho said:
Yeah, I would try to do it as soon as possible too, I would go for a 10 year one. Obviously depends on what you can afford per month though.
Well I have zero debt and whilst I don't want to give away my salary you know the rough amount from the £175K maximum they're almost all throwing out.This is kind of the point though i.e. I might be able to afford to spend a grand a month (random number) on a mortgage but I might only be slightly worse off by committing to £300/month but saving the other £700 with a view to paying the mortgage off but also building up my emergency fund.
Essentially I have no outgoings other than working out what the hell it costs every month to live on my own
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hstewie said:
hstewie said: Well I have zero debt and whilst I don't want to give away my salary you know the rough amount from the £175K maximum they're almost all throwing out.
This is kind of the point though i.e. I might be able to afford to spend a grand a month (random number) on a mortgage but I might only be slightly worse off by committing to £300/month but saving the other £700 with a view to paying the mortgage off but also building up my emergency fund.
Essentially I have no outgoings other than working out what the hell it costs every month to live on my own
Fair point mate, maybe an offset mortgage would be the way to go then. And you're right, even with a 25 year mortgage you can always overpay (subject to terms) and still pay it in 10 years. This is kind of the point though i.e. I might be able to afford to spend a grand a month (random number) on a mortgage but I might only be slightly worse off by committing to £300/month but saving the other £700 with a view to paying the mortgage off but also building up my emergency fund.
Essentially I have no outgoings other than working out what the hell it costs every month to live on my own
Having said that I don't think it would come to a grand a month for 50k over 10 years, I thought it would be closer to 5/600 quid. PH has a few mortgage guys (Sarnie comes to mind) I'm sure they will be able to provide better advice.
Moominho said:
Yeah, I would try to do it as soon as possible too, I would go for a 10 year one. Obviously depends on what you can afford per month though.
ThatsWhatShe said:
If i could afford to, i'd pay the sucker off as soon as possible. the difference in monthly cost between a 25 year mortgage and a 15 year one is not that much. play the game and try every combination you can think of to get the best deal for your lifestyle.
Why!?What about opportunity cost?
I bloody wish it was £45-50K 
What have I missed?
I'm not trying to be too precise, I'm focussing on (rough) costs of running a house so I haven't included things I'm not paying now i.e. clothes, diesel, car insurance etc.
| Item | Monthly Cost |
|---|---|
| Council Tax | £ 125.00 |
| Gas & Electricity | £ 75.00 |
| Water | £ 25.00 |
| TV License | £ 12.00 |
| Sky (inc Phone/Broadband) | £ 80.00 |
| Food | £ 250.00 |
| Home & Contents | £ 35.00 |
What have I missed?
I'm not trying to be too precise, I'm focussing on (rough) costs of running a house so I haven't included things I'm not paying now i.e. clothes, diesel, car insurance etc.
bhstewie said:
hstewie said: I bloody wish it was £45-50K
What have I missed?
I'm not trying to be too precise, I'm focussing on (rough) costs of running a house so I haven't included things I'm not paying now i.e. clothes, diesel, car insurance etc.
Well you still paying all the things you didn't included in your table, so you should count them in as well.| Item | Monthly Cost |
|---|---|
| Council Tax | £ 125.00 |
| Gas & Electricity | £ 75.00 |
| Water | £ 25.00 |
| TV License | £ 12.00 |
| Sky (inc Phone/Broadband) | £ 80.00 |
| Food | £ 250.00 |
| Home & Contents | £ 35.00 |
What have I missed?
I'm not trying to be too precise, I'm focussing on (rough) costs of running a house so I haven't included things I'm not paying now i.e. clothes, diesel, car insurance etc.
I just bought a second property from a bank (foreclosure), borrowed 42K as a mortgage and this is just under 350 a month over 13 years. If I make a lump sum payment of 3000 a year it will be paid off in 6 years and 2 months. This is half the term.
So, I would say, pay it off as quickly as you can.
Cemesis said:
£75 a month on gas an electric might be too low (prices go up alot every year).
£80 a month on Sky?! Thats £720 a year + £150 for the TV licence is nearly a grand for watching TV? Seems high...
£960.£80 a month on Sky?! Thats £720 a year + £150 for the TV licence is nearly a grand for watching TV? Seems high...
But if thats for TV, phone, broadband its not so bad.
I think energy bills will depend very much on the house, how well insulated it is, how big it is, how good the boiler is.
I paid £9 (gas) & £25 (electric) last month, I doubt it will go much over £50 for any month over winter.
Sarnie said:
0to60tv said:
Don't forget life insurance/critical injury etc...depending on cover £50-£100/mth?
This is important. I speak to lots of clients who think they are immortal or immune to being made redundant.
Another client cancelled his policy after a rant telling me how it was a rip off and I only sold it to get commission etc... he called me two months later having been diagnosed with cancer... I took absolutely no pleasure in having been right this time, poor chap may lose his home.
ETA If you're only going to take a short term mortgage of £50,000 - depending on age, it may cost a lot less than £50
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