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Repayments on a £400k mortgage??

(38 Posts)
NoonarAgain Thu 30-Jun-16 11:06:54

Can anyone please help me calculate worst case scenario mortgage payments on £400k if interest rates went up to the worst conceivable level?

We are about to buy/ sell despite Brexit and i am trying to get our budget straight in my head.

BTW, i know its a lot of money to borrow but dh seems to think we could manage. However, i'd like to have the heads up on some figure before we discuss it properly tonight.

Many TIA

lcoc2015 Thu 30-Jun-16 11:17:03

I use this calculator

You can change the interest rate and the term to see what the monthly repayments will be

redhat Thu 30-Jun-16 11:18:13

repayment or interest only?

bakeoffcake Thu 30-Jun-16 11:19:47

That calc seems to be in Euros lcoc

There are many calculators on uk sites. Google is your friend.

Notyetthere Thu 30-Jun-16 11:20:45

I think you need to provide more information. Your repayments would depend on how much deposit you put down.

Plug a few figures in the MSE mortgage calculator and see what you get. You will need to know what interest rate you might get.

Assuming that you are borrowing 400k, over 25 yrs, with an interest rate of 2.5%, your monthly repayments would be £1795.

heron98 Thu 30-Jun-16 11:25:07

You are borrowing £400K? Is that the right number? it seems a tremendous amount.

NoonarAgain Thu 30-Jun-16 11:26:51

Oh ok, thanks everyone! Notyet, we would be putting down 630K. I think repayment only for a couple of years at least.

what interest rate should i be looking at as a worst case scenario?

Notyetthere Thu 30-Jun-16 11:28:12

It's probably not tremendous to some people if the house costs 800k. That's 50% of the house's value

NoonarAgain Thu 30-Jun-16 11:30:41

We are in the south east, so the property prices are crazy. i'm just trying to decide if we should do more of a sideways move, really, or move 'up'.

Notyetthere Thu 30-Jun-16 11:50:31

Ok then you will need this calculator. Put a few figures in and see what figures you get. This calculator lists the best buy rates and which banks.

From the figures you have provided, looks like you will be borrowing 40% of the property's value which should get you some favourable rates. Going by the figures you have provided, looks like even 1.5% rates are available. I believe HSBC have even put out a 0.99% rate recently. Be ware of the high set up and product fees; these fees should however, have a lesser impact especially you are borrowed a high figure.

What term are you going for?

lcoc2015 Thu 30-Jun-16 11:55:19

Bakeoffcake - the calculator is not tied to a currency so works for stg/usd/aud etc. Op i think if you want to stress test your repayment amount then the highest interest rates have been since 90s is about 6.5%

However if your repayment term is short and you have such a high loan to value amount then you should be able to negotiate a very favourable rate - possibly fix it if you are worried about ability to repay under high interest rate conditions?

frenchfancy Thu 30-Jun-16 12:04:08

In the early 90s interest rates were hovering at the 10% mark - a bit higher than that late 80's. So a £400,000 mortgage which at today's rate would cost £1504/ month at today's rates could go up to £3634/month . Yes you can fix for 2 years, but can you fix for 25?

lcoc2015 Thu 30-Jun-16 13:01:59

One option would also be to extend your term to the max allowed so contracted monthly payments are low and then voluntarily pay off an additional lump sum each month. If interest rates hit a high then you could revert to simply paying the monthly agreed payment. You would need to ensure there were no penalties for doing this though.

Artandco Thu 30-Jun-16 13:12:40

I would allow for 15% interest rates which were also in the 90s

namechangedtoday15 Thu 30-Jun-16 13:46:59

I may be too optimistic but mortgage rates for such a low LTV are (as highlighted above) somewhere between 1 and 2%. Of course its a possibility that interest rates will rise, but they are not going to rise to 15% over the short term. Obviously you need to look over the whole of the term, but if for instance they rose, they would do so incrementally. You have the option to fix your rate if the forecast looks like they will continue to rise, or to remortgage. Of course, you'll have paid down your mortgage in the intervening period, you may be further up the career ladder (although equally you might not have less income) so it won't be a question of working out what your payments will be on a £400,000 mortgage at 15%.

Hope that makes sense.

Anonymousperson Thu 30-Jun-16 20:45:57

I always use the BBC mortgage calc....incredibly easy to use smile

NoonarAgain Fri 01-Jul-16 06:57:04

Thanks so much everyone. I'm so grateful for the time you have taken to post and apologise for my late reply.

I'm soooo bad at all this, but....I think we would want a fixed rate for 2 years to feel 'safe' post Brexit, then be able to offset/ pay off the mortgage in big chunks. Not sure of the term, but would we say 25 years as standard? We would hope to half the amount of borrowing over the next 5 years at the latest.

VertiginousOust Fri 01-Jul-16 07:02:08

Term also depends on your age - we found getting our current mortgage that we had to go for 23 years (whatever takes you up to 65, basically) as we were early 40s. Previously we've always gone for the shortest term we could afford the repayments at (say, 10 or 12 years) and checked the terms to make sure unlimited overpayments were allowed. Quite a lot of mortgages allow you to overpay by 10 or 20% each month or year with no penalties, but if you want to do big lump sums then look for a flexible one.

VertiginousOust Fri 01-Jul-16 07:03:09

Also should point out that with article 50 being 2 years from invocation, you will need a longer fix than 2 years to take you to post-brexit.

NoonarAgain Fri 01-Jul-16 07:07:25

Hi vertigo, thanks v much. We are mid forties (almost). The 2 year thing for us also corresponds with times frame when both dds will have school fees to pay, so we could cope with fees OR a spike in interest, but not both.

Oscha Fri 01-Jul-16 07:24:26

We're in the middle of remortgaging and just decided to do a 5 year fix next instead of a 2 year fix. I don't want our fix to end just as we're about to actually exit the EU.

NoonarAgain Fri 01-Jul-16 07:26:07

Good point oscha, but if I fix for 5 years we can't pay off a lump sum, can we??

Oscha Fri 01-Jul-16 07:43:13

Think that depends on your mortgage/bank. Ours (First Direct) allows us to make whatever overpayments we like as long as we don't pay off the full amount within the fix.

NotCitrus Fri 01-Jul-16 08:22:53

Most mortgages let you overpay by 10% a year, so if you had 400k mortgage you could pay nearly £40k extra a year.

user1465823522 Fri 01-Jul-16 08:24:28

honestly, if you have to question whether you can afford the payments then you probably can't.

Talk to your bank about your specific circumstances and not some strangers on a forum.

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