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Mortgage Guide
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Mortgage Basics
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What mortgage term should I choose?
Traditionally mortgages lasted for 25 years, but nowadays, your
mortgage
term can be as long or short as your mortgage
lender will allow and you can afford.
But there are reasons why 25 years became the accepted term
The problem with very long terms
Although it may look cheaper to borrow over longer, this is
an illusion as the following example shows
If you used a repayment
mortgage (also known as a capital and interest mortgage)
to borrow £100,000 over 25 years at
an interest rate of 6 per cent, you would repay around £644
a month or £193,390 over the term.
The same loan taken over 40 years
would cost just £550 a month, but
because you would be paying interest on your borrowing for far
longer, the total cost would be £264,100.
The problem with very short terms
You can choose as short a term as your lender will permit. This
will save you a significant amount of interest but you will
have to find the cash to clear the loan far more quickly.
Taken over 15 years, the total cost
of that £100,000 repayment
mortgage falls to £151,893 but
you will have to shell out almost £844 a month.
A word about remortgages
If you're remortgaging, you might
be tempted to cut your monthly costs by reverting to a 25-year
term.
But remember that this will raise the total cost of your loan.
So if you can afford it, take the new loan over the same term
as remained on your old one or opt to cut it even further.
To work out what your preferred term will cost, use our
calculator at How
much will my mortgage cost me every month?
For more options, also have a look at How
to pay off your mortgage early.
You might also find it helpful to read
Should I choose
repayment or interest-only?
Should I go for a fixed
rate mortgage or a discount rate?
and What length of deal should I choose?
Read On / Mortgage Basics
What
is a mortgage?
A basic summary of the
rules
The
choices you need to make
How much can
you borrow?
How do you prove
your income?
How long are mortgages
usually for?
What will happen to interest rates?
Read On / Mortgage Guide
How
to Choose your Mortgage
Types of Mortgage
Remortgages
Where to Find your Mortgage
Getting
a Mortgage in Principle
Read On
Guide to Buying Home in the UK
Guide to UK Home and Mortgage Insurance
To read more on this subject please see the list below or your mortgage guide or your home buying guide
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Read more Mortgage Basics (list below)
See contents of Full Mortgages Guide
See contents of Home Buyers Guide
I've read enough for now and want to get a free Quick Mortgage Quote
Mortgage Basics
What
is a mortgage?
A basic summary
of the rules
How much can
you borrow?
How
do you prove your income?
How long
are mortgages usually for?
How to get a Mortgage in the UK
Here we give you a step by step guide on how to get a mortgage with special tips
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employed - shortcut
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buying my first mortgage -
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Mortgage
Basics
How
to Choose your Mortgage
Types of Mortgage
Where to Find Your Mortgage
Getting a Mortgage in Principle
Browse over 200 Free Mortgage TipsYour Complete Guide to UK Mortgages Find Out How to Win the Race to Buy Your Home - Home Buyers Guide Learn How to Save ££s by Remortgaging Read the Insider Info on Home Insurance Site Help |
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