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?

Apologies wrong thread

Yes, but the OP is wisely talking about focusing on investments with her spare money. These should grow significantly more over time.

Therefore it's almost certainly a better financial decision to take the mortgage over a longer period and invest spare money rather than pay down the mortgage. After 10/20/30 years you could be tens of thousands of pounds better off doing it this way.

A lower mortgage payment also gives flexibility if life throws a curve ball like loss of income.

Its interest...

We took out a 525k mortgage over a 35 year term which takes us to age 70. A few years before this we would have thought that was mad ,but we had a rethink after realising we could still overpay as if we had a 25 year term, but it gives us a bit more flexibility should we need to just pay the regular amount one month for any particular reason. We are regularly overpaying and have brought it down to 480k after just over a year. We should clear it in 18-20 years rather than 35 depending on future circumstances and interest rates. At the moment we are opting to have overpayments reduced the monthly payment rather than the term, as this continues to protect us better against a job loss or other unexpected scenarios.

If you are investing and saving additional funds into your pension, you may find this is a better long term strategy than throwing everything at the mortgage anyway. We're trying to balance between those two things but ultimately we are on track to have good pensions, and if we do end up with a small mortgage still to pay I think that would be fine.

If we ever find a property we like and want to proceed with, we will opt for the 35 year term and overpay. This seems like the sensible decision given rates are on the increase again!

Did you not have a play with any online tools like Martin Lewis's mortgage calculator before your appointment? I'm surprised it was such a shock, surely even with no interest £300,000 paid back over 240 months (20 years) is £1250 and you knew there'd be interest too?

I would suggest https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/ as a decent place to start and also, kindly, just deciding you are going to retire at 55 when you don't even own a house is incredibly ambitious. I would go for a 35 year term and overpay every month personally especially if you are at a volatile or dynamic stage of life where kids, career changes, or other significant lifestyle factors might still be fluid.

300k would be 1250 even before any interest was added though.

Friends and family all have mortgages around the £300-350k mark, some have borrowed even more so I was a little shocked at the figures initially. I’ve decided to borrow over a 35 year term.

My retirement plans have been in the making since I was 21 and I’m more than on track. I do own a house, I just don’t have a mortgage.

It is and £1850 is a big leap from the £1250!

Good luck with it, I think you are making a wise decision with an extended term. If you already own a house outright then you are indeed in a great position for your age, congratulations. My first port of call is always to do my own research before talking to a professional so I was just a little surprised, but we are all different!

He’s my friend, I had messaged him earlier in the day and then he called later that evening so my use of the word “appointment” was probably wrong. I would have preferred to be more organised! My original query was about buying a property at auction so we have gone full circle 😂