How much?!

[housetohome8]

We have had our appointment with the mortgage advisor and we can lend just shy of £500k. We don’t need to lend that much and we are looking at borrowing £300k.

I thought this was a fairly average amount to lend but monthly repayments on a 20 year term will be £1850. That seems insane?!

I am not sure what my question is but surely people don’t have mortgages this high? What are people doing to reduce it? Longer term?

Wise decision. Location is the one thing you cannot change!

I think people often borrow as much as they are able to, so if you’re borrowing is based on two incomes rather than one, then most people will end up borrowing double the amount they would have on their own, and have double the mortgage payment.

You're borrowing not lending. There's a big difference.

Why are you lending to the mortgage company. Do you mean borrow....

Are you confusing the words borrowing and lending? I can't follow the OP.

Some parts of the UK use lend to mean borrow.

eg can I have a lend of your bike.

We took ours over 35 years, make a small overpayment at the moment and hoping to reduce the term as LTV and interest rates settle. 20 years is definitely not the norm. Most of my friends took out between 30-35 years. One friend has took out for 40 years bur did buy at 25 so still within retirement age.

You are right, thank you for clarifying. English is my second language.

We took a 35 year mortgage at age 25 but overpaid when we could and when we remortgaged we were able to reduce the length

We borrowed £700k ish, and repay £3.5k per month ish. The bank offered us to borrow about £1.1m which would have made payments too expensive. We also overpaid the max £70k in the first year. We no longer overpay (thanks, nursery) our term was originally 20 yrs, but extended slightly when we remortgaged after 2 years as kids are expensive. We’re down to just below £500k now, feels like it’s going to be massive for a long time. So in answer to your question, put it as a longer term, then overpay if you can.

But its clearly not an "average" amount to lend and I cant imagine why you think it is?

A 2 second google would tell you the average house price in the uk is £270,000. That means a huge percentage of houses are worth less than your mortgage. Then you also have houses above the average price which have higher deposits, or where the mortgage interest rate was lower when it was taken out, and a lot of other factors.

£300,000 is a lot of money to most people so of course the repayments are going to be high.

Looking at the average across the UK is probably unhelpful because it varies massively. £300k would get you a small starter home here. In my area, it’s a fairly average amount to lend.

We are currently in the middle of our mortgage process and are doing 35 years. If we did 20 years with our current rate it works out to be £1,212 per month over £935 per month at 35 years (and that's with 95% LTV). We also didn't borrow our max. We private rent currently and it works out to be slightly under it as we didn't want high payments. We do plan to overpay though or at least add extra when we remortgage as it pays it down faster.

I'm in my late 20s and my husband is late 30s and we are doing 35 years and we didn't even get questioned on it so you may be able to also do 35 years if you wanted. You can usually overpay by 10% per year without penalty to get it down quicker, however our lender lets us do 20%

Our mortgages were always over 20 years as house prices were much lower but on the other hand interest rates were much higher. We payed as much as 16.5 % and never less than 6% but we overpaid on standard mortgages, avoiding Endowment mortgages due to hubby being a type 1 diabetic. Even when we moved south and had to borrow much more we still paid over 20 years and paid it off early as there were no penalties for doing so.
Op needs to know the difference between "lending" and "borrowing" so as not to be taken advantage of

It varies but more commonly the age cap is 75. Some even go up to 85! A couple of my friends have gone for a 40 year term so it’s definitely doable for us.

Yep. Go for the longer term but overpay and you save a ton in interest and if at any point you need extra money for daily spends etc you can stop over paying. The shorter term you are locked in to committing 1850 a month and no flex. I borrowed £270k last year and I am paying £1415 @ 4.11% and then overpay as much as I can. Hoping to turm a 26 year term to 15 years.

As other posters have said absolutely go for the longest term you can and overpay. It really makes a difference

I went for a 35 year mortgage and am looking to have paid it off at 55 after 22 years. Every penny does make a difference

Historically, mortgages were taken out over a 25 year term, so not sure where you got the 20 years from. These days it is a lot more common to borrow over a 30, 35, or 40 year term.

As a pp said, if your plan is to overpay regularly (which is wise, if you can afford it) make sure you look at the T&C as most deals have a limit on the amount you can overpay.

We could easily pay the mortgage at the higher end but I’d rather continue my investments at the current pace so I can retire early.

To reply to your question on P1 about affording larger payments though, you have answered your own question here in that most people taking out their first mortgage aren't also putting money into investments at the same time. The majority of people would need all of their income to pay the mortgage, their bills, and some treats and small savings. If you are ploughing money into investments, then obviously you won't have as much left over to pay your mortgage. You have to choose which you'd rather do, as you are clearly in a fortunate enough position to be able to do that.

Seems normal to me. Our mortgage is £635k and we pay £2900 a month.

We did part repayment, part interest only and prioritised pension savings. Then used some of the 25% tax free pension lump sum to clear the mortgage.

I took my mortgage out 20 years ago, and took a 35-year term. On each renewal I lowered the term, also overpaid, and I paid it off in full 15 years into the mortgage. Best to start with a longer term as you should get a better rate and can still reduce it later. Now I have the capital in my house I'd do it differently, as if I move I won't be looking to borrow as much, so then a shorter term sounds better.

I was astounded too on how much a high street bank would lend to us - 5.5x salary in addition to the 2 mortgages we already had. In total our borrowing capacity would be 7.5x our salaries!

You're not lending but borrowing. The mortgage company is lending!

I have already addressed this. English is my second language. I also posted this off the back of a conversation with the mortgage advisor who on several occasions said the words “mortgage lender” so I had lender and lending at the forefront of my mind.