20 or 25 year mortgage?

I've been looking at jeacle, but can't figure out how to put extra payments into the data.

I've been offered both 20year and 25year mortgage terms on variable mortgages; both are good rates (at the moment!), with the 25 year one being slightly higher. On the 20yr, the repayments are steeper which would impact on lifestyle. The 25yr term has repayments which wouldn't impact on lifestyle. In either case I would like to make extra payments against the principal along the way, but I have a debt I need to clear first. Would I be mad to go for the 25 year one?

Would I be mad to go for the 25 year one?

Click to expand...

I suggest you cut your cloth to suit your measure. If you can deal with the repayments and are happy with a lifestyle change then take the 20 yr mtg.

Its generally a good idea to go for the shortest term possible in your circumstances (as you pay less interest). However, if you think the 20 yr term will stretch you too much, you could take out the 25 yr term and reduce it in the future.

For instance, if you take the original mortgage over 25 yrs and you decide to decrease the term, you can do so. If you then find it the higher repayments too much, you can increase it back to the original term. It is probably easier to do this than trying to extend the original term.

Mortgage protection will also be cheaper if you have a shorter term.

buyingabroad said:

Mortgage protection will also be cheaper if you have a shorter term.

Click to expand...

True but depending on age and health, five years shouldn't make a big difference.

If you initially go for the 20 yr mortgage with a view to increasing it in the future, it would be easier to take the mortgage protection policy over the longest term initially. These policiies are generally inflexible and if you take a shorter term and later try to increase it, you'll find yourself cancelling and/or taking out a new policy to cover the extended term.

Of course this applies to mortgage protection policies only and there are other products which have flexibility.

you can take a mortgage out over any term, how would repayments over 22 or 23 years suit?

Havealaugh said:

I suggest you cut your cloth to suit your measure. If you can deal with the repayments and are happy with a lifestyle change then take the 20 yr mtg.

Click to expand...

I agree with this but if you think the 20 year repayments would be a struggle would you be able to meet the repayments if interest rates went up 2 or 3 percent, you need to ask yourself this.

First of all congratulations on being sensible.....your in the right ball park, none of this 30-35 year stuff.

Depending on your circumstances i'd go with your gut feeling. There is a balance somewhere which I believe its healthy for people to keep. Not too get to morbid but you only live life once..........so a good lifestyle, within a sensible financial framework would make sense.

Having a 20-25 year mortgage would be a sensible financial framework to work with, unless your age is against you.