Are 40 year mortgages a good idea?

Yes niceoneted, I own the site. It's what's making it possible for me to do this! Without it I couldn't afford it. Was thinking the same, do the big things well and not furnish except essentials for a while.. Hope to remortgage after I get on my feet.
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Sounds like a plan to me:)
 
According to todays paper, the output of housing is to fall over next few years so building costs should'nt rise much and will likely fall over next few years as more cheap labour from eastern europe arrives eager to work and capable of undercutting Irish builders. Waiting and renting and saving(or putting luxury mobile home on site!) won't cost you much and could save you a lot.
 
Sorry for stating the obvious but could you not revise the plans and build for less money? You can always add on extensions etc once more money comes in...

Does a 40yr mortgage really increase affordablity that much over a 35yr - I always thought that it didn't. 40yrs is fairly crippling as far as the interest paid is concerned.
 
Based on my earlier examples which illustrated how lengthening the term can have a significant impact on total interest costs over the planned lifetime of the loan... €300K at 5% over

20 years: €1,980 p.m.
25 years: €1,754 p.m.
30 years: €1,612 p.m.
40 years: €1,447 p.m.

ignoring mortgage interest relief and mortgage protection life assurance premiums.
 
Yes I'm thinking about that.. The whole process is still in early stages, just having sketches drawn up by architect, no acual plans yet. He's the one who advised me to ask for 140-150k. I'm thinking (hoping rather than thinking) it might not come to that much. It's a 1375sq ft 3 bed bungalow I want, well finished but plain in design to minimize costs. Also I don't mind not doing all the rooms for a while.

I'm going to First Active on Friday, I'll see how I get on.. The lady told me provisionally on the phone I would be ok for the 140k over 40 years, but not over 35 years (have almost 8k saved and hope for a bit more while waiting for planning etc to go through). Would rather less than 40 years but if it comes to it I'll have to go for it. Thanks to all for your input.. It's all appreciated..
 
By the way I'm going to try other banks/brokers also, not just First Active! It's just if I have to go the 40 year route, not as many places do that..
 
claregirl said:
By the way I'm going to try other banks/brokers also, not just First Active! It's just if I have to go the 40 year route, not as many places do that..
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Went with a 92% 39 year mortgage with Ulster Bank last year as a single buyer. Best thing I did. Could have gone for 35 year mortgage but the 39 year mortgage gave me a buffer for the numerous interest rate increases that occured the month after I drew down the mortgage - Oct 05. I'm also paying back part of the deposit for the house too, another reason for the longer loan term. The house has gone up significantly in value. I didn't fancy renting for another few years to save the rest of the deposit as the house would now be out of my reach.

If you go with the longer term non fixed rate mortgage you have the option of paying extra each month to make your mortgage a 35 year mortgage.

The difference in mortgage protection insurance for 35 vs 40 years is negligble.

Do the sums using an online mortgage calculator...if rates were to go 2% would you be able to pay the 35 year mortgage? While I knew the rates were due to go up I did not think they would go up so fast - 5 or 6 times...with the longer term I didn't even have to think too much about it. But I knew that rates in Northern Ireland were 6% when I was looking so I looked at this as a guideline. [broken link removed]

I also don't plan to be in the house for 39 years and if I were I would readjust the mortgage payment to reflect this.

Best of luck.
 
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