Jump to content
House Price Crash Forum
Sign in to follow this  
DonnieDarker

Had To Talk A Friend Out Of A 35 Year Mortgage Today.

Recommended Posts

FTBs are getting insanely desperate.

Anyone else heard of the consideration of 35 year mortgages happening?

Told him if you're buying:

get something you can afford on a 25 year which still allows you to:

overpay by 10%

save enough to build up your funds for the inevitable upgrade (once kids arrive).

Factoid:

overpaying mortage by 10% reduces mortgage length by 22%

Share this post


Link to post
Share on other sites

FTBs are getting insanely desperate.

Anyone else heard of the consideration of 35 year mortgages happening?

Told him if you're buying:

get something you can afford on a 25 year which still allows you to:

overpay by 10%

save enough to build up your funds for the inevitable upgrade (once kids arrive).

Factoid:

overpaying mortage by 10% reduces mortgage length by 22%

When did you pass your IFA exams?

Share this post


Link to post
Share on other sites

Nothing wrong with 35 year mortgages per se.........as most people i know are getting infinitely long(aka interest-only) mortgages....

Always lots of fuss in here about 50 year or 100 year Japanese-style mortgages but they're here now in the form of interest-only products.....You can make an interest-only mortgage a de facto 100 year mortgage by setting up a capital repayment plan (ISA for example) and paying into it so slowly it'd take 100 years to grow sufficiently to pay off the loan...........500/1000 year mortgage same principle!...

As with interest only the principle is sound if the interest part of the loan isn't too much more than it would cost to rent......

Someone taking out a 100 year loan (if they'd been allowed at the time) 25 years ago on a typical home would have paid say £30,000 for the home .......and be still paying monthly interest of say £125 but this is about a fifth or sixth of what a renter now pays for a similar property....Also the buyer would have made £170,000 out of HPI............The fact he still owes most of the original £30k loan pales into insignificance.

I am merely pointing out the unimportance of the mortgage length...even though I am fully aware of how you can massively shorten a mortgage's length by overpaying ..on a repayment loan.

This is why unless you think property is overvalued in the shortrun as most people in here obviously do you should always buy............

Edited by Michael

Share this post


Link to post
Share on other sites

Nothing wrong with 35 year mortgages per se.........as most people i know are getting infinitely long(aka interest-only) mortgages....

Always lots of fuss in here about 50 year or 100 year Japanese-style mortgages but they're here now in the form of interest-only products.....You can make an interest-only mortgage a de facto 100 year mortgage by setting up a capital repayment plan (ISA for example) and paying into it so slowly it'd take 100 years to grow sufficiently to pay off the loan...........500 year mortgage similar idea......

Can`t disagree with any of that. 40-50yr terms may become common place, start a 25 year repayment at age 35, or a 35 at age 25? Start paying it down, making regular over-payments and that 35yr might become a 20 year inside 5 years. If inflation ain`t gonna pay it down what is? Keeping your eye on the ball <_<

Share this post


Link to post
Share on other sites

FTBs are getting insanely desperate.

Anyone else heard of the consideration of 35 year mortgages happening?

But if FTBs are still desperate to get on the so-called "housing ladder" at any cost, then the conditions for a crash are not here yet.

Billy Shears

Nothing wrong with 35 year mortgages per se.........as most people i know are getting infinitely long(aka interest-only) mortgages....

Always lots of fuss in here about 50 year or 100 year Japanese-style mortgages but they're here now in the form of interest-only products.....You can make an interest-only mortgage a de facto 100 year mortgage by setting up a capital repayment plan (ISA for example) and paying into it so slowly it'd take 100 years to grow sufficiently to pay off the loan...........500 year mortgage similar idea......

Doesn't the bank specify when the mortgage has to be paid back if you take out an IO mortgage? I can't see the banks letting people take out an infinity year mortgage when people do not live to infinity.

Billy Shears

Share this post


Link to post
Share on other sites

FTBs are getting insanely desperate.

Anyone else heard of the consideration of 35 year mortgages happening?

Told him if you're buying:

get something you can afford on a 25 year which still allows you to:

overpay by 10%

save enough to build up your funds for the inevitable upgrade (once kids arrive).

Factoid:

overpaying mortage by 10% reduces mortgage length by 22%

How does a 35 year mortgage make any difference as it is the interest payments that make mortgages so big?

What was the difference between 25 and 35 year mortgage in monthly costs?

Share this post


Link to post
Share on other sites

How does a 35 year mortgage make any difference as it is the interest payments that make mortgages so big?

What was the difference between 25 and 35 year mortgage in monthly costs?

If a home-owner can afford to pay back £1000 a month, then assuming 5% interest calculated on the outstanding balance monthly, they can afford the following mortgages.

25 years: £171,000

35 years: £198,000

50 years: £220,150

100 years: £238,360

Assuming a 200K mortgage, the amounts that has to be paid monthly to service the (repayment) mortgage for various lengths of mortgage are:

25 years: £1170

35 years: £1010

50 years: £909

100 years: £839

Billy Shears

Share this post


Link to post
Share on other sites

How does a 35 year mortgage make any difference as it is the interest payments that make mortgages so big?

What was the difference between 25 and 35 year mortgage in monthly costs?

£200 on a repayment based on 5%.

The interest you would pay on a £220k mortgage jumped by about 90k for the additional 10 years.

However I think they were considering it so they could borrow more money...making the interest even bigger and nulling the the £200 saving.

I have to disagree with those saying 35 year mortgage is no biggy...are you crazy? IMO even considering a 35 year mortgage means you are buying beyond your means. The additional interest you'd be giving the banks is not peanuts.

It's one thing gettng a 25 year mortgage, re-mortgaging in 5-10 years and using the capital for an investment...it's another thing altogether taking on such a big mortgage just so you can afford somewhere.

Edited by DonnieDarker

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.