To consider a 25 year mortgage at aged 38?

[privateporcupine]

I have a small mortgage just now, one year into a 15 year term. As I bought through RTB, I have to stay here for another 2 years.

Once those two years pass, I plan to move and take a bigger mortgage, hopefully with a deposit of at least £15/16k. I’ll be nearly 38 by then and a 20 year mortgage would be ideal, but assuming I’m still single, on about £25/26k, with a teenager at home, a 25 year mortgage is probably more likely. Meaning I’d be 63 when I pay it off. That seems quite “old” and doesn’t leave long to maximise savings for retirement.

I just wondered how many others have been that age or will be, and how you’ve found it?

Thanks.

Pretty normal. What's the scope for pay rises /overpayment? I'd aim to have it paid off by 60 irrelevant of term.

What's the scope for pay rises /overpayment?

That's the key. Find a mortgage with no/low fees for overpayment that way you're only locked in to pay what you can afford but if you can manage more some months then you can get it paid off much quicker.

I have just taken out a 35 year but aim to pay it off in 25, it just means I have some flexibility if I get a surprise bill one month or something like that.

It’s pretty normal these days

Pay rises, hard to say in the current job, and not overly ambitious to move out of it, not at the moment anyway.

I’m overpaying just now to try and maximise my equity for selling this place, and I’d hope that if and when DS is no longer at home, I’d be able to make some overpayments on a larger mortgage. But just now I’m planning for worst case scenario kind of thing.

Similar age and we’re doing a 35 year one but you can renegotiate when the fixed term (5 years in our case) is up. We’re planning to overpay by 10% to counteract the longer term until the fixed term expires.

I took out one last year at 46. Pretty scary but had to be done.

Quite normal to have a 25 year mortgage at your age. I'd echo what others advise though - go for one that allows overpayment and do so when you can. You can always reduce the term later at renewal time if you want to, or keep the longer term and continue overpaying when you can.

Just started at 45. Was now or never really. I'll be very old in 24 years but hopefully with a bit of over paying it will be paid by retirement age. The alternative was forking out over a grand a month in rent for ever and ever with agents fees on top.
Have no idea if we've done the right thing.

You could always downsize in retirement and buy 2 small flats. The money you get from rent for one of them won't be huge but it should give you a nice bit of extra cash each month aside from your pension.

Honestly though, you can't spend all of your life being practical and you sound sensible enough to make the right choices later on so ease up on yourself and do what makes you happy

Thanks, this is reassuring! I’ve been kicking myself for not getting started on the property ladder 5 yeas ago, and for some other ridiculous decisions I’ve made money wise.

But at least I’m there now, and I had my doubts a year ago that I’d even get given a mortgage, so things could be worse. I’m just glad to not be renting anymore and know that I should have something to leave my son one day.

As long as you don't need to pay care home fees....

6 months ago we too didn't think we'd ever be able to buy and were facing being homeless. Went through a broker and here we are day 5 in our new home.

The age thing is scary but then I don't know how we could have afforded rent in retirement.

And who knows what the future holds for any of us. Good luck

I took a 25 year mortgage out on my own at 40. Now I am 52 and haved sold that place and am living abroad mortgage free due to the sale of said property, with a DH and our kids. When I took out the mortgage I was single. Do it. You don't know what is around the corner. Its a commitment yes but not a life sentence.

We took one out when we moved at a bit older than that. We have been overpaying by 10% the last couple of years so it is already coming down. I don't think it is that unusual, our bank didn't seem it the least bit surprised.

Blimey, I wouldn't worry about 25 years - I was 37 when I took out a 30 year mortgage! I plan to shorten it as I go (take a shorter term rather than lower payments when I remortgage) but it was the only way at the time that I could afford any house in my local area with a repayment I could afford.

I'm going to be 51, when I take out a 15 year Mortgage, for major house repairs, probably not as much as you. But many of my peer group are doing the same, or releasing equity etc to help children.

So you are by no means alone.
Just remember it was Social Housing that enabled you to do this, when you are old.

Yes, I am aware that I’m very lucky to be in this position, and I’d much rather have done things differently.

Just bumping for some more opinions/experiences.

A term of 25 years just determines the monthly payment, not when you’ll pay it off - you can (and should) change monthly payments (up) when possibly and make lump sum payments again where possible.
I took out a 35 year mortgage 6 years a go and there are now 13 years left. I made some overpayments but mostly I just kept the outgoings the same even when I moved to a lower LTV and got better rates.

We're technically mortgaged up until one of us is 70! However we are overpaying so it is coming down (a third paid off in 5 years) and we have equity so we could downsize to be mortgage free before then.

I took a 30 year mortgage at 38 (mostly because due to circumstamces and finances that's all I could get). I do currently overpay by about half each month, which is more the figure I was thinking I would be paying over a shorter term anyway. But I know that my income will be fluctuating over the next 10 years so I can drop to minimum payment again if I need to.

Whatever your monthly payment is now will almost certainly be a much smaller percentage of your income in 30 years so don't worry about it!

Inflation over that period will mean the payments become less in proportion to your income (even if mortgage interest rates rise, they're a percentage of your mortgage which won't rise).

Owning your house will mean you're not paying rent during your retirement.

As long as you don't need to pay care home fees. Should the need arise you can sell the house for care home fees.

Indeed that is what you'd do, I was just referring to OP wanting to have 'something to leave her son'. It doesn't seem to work that way.
I guess you only get to inherit if you're lucky enough to stay in good health.

It's normal to have a mortgage to retirement age. It's when the term goes into retirement there could be a problem. The days of buying a house for 3.5x income straight from school are long gone.

It is normal but I would rather not.

As of this week your workplace pension contributions will be at least 5% so you are already "saving" something for retirement. And of course you'll have about 5 years when your mortgage ends to whack up your savings if you retire at state pension age. You'll be fine.