• About Us
  • Privacy Policy
  • Contact
Mortgage Insurance Center
  • Home
  • Mortgages
  • Health Insurance
  • Home Insurance
  • Life insuranace
  • Finance Laws
    • Banking Laws
    • Assets
    • Interest Rate
    • Loans
No Result
View All Result
  • Home
  • Mortgages
  • Health Insurance
  • Home Insurance
  • Life insuranace
  • Finance Laws
    • Banking Laws
    • Assets
    • Interest Rate
    • Loans
No Result
View All Result
Mortgage Insurance Center
No Result
View All Result
Home Mortgages

I’m a mortgage expert – common loan mistake could be costing you £19,000

by Matthew Upton
June 5, 2022
in Mortgages
0
I’m a mortgage expert – common loan mistake could be costing you £19,000
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

[ad_1]

A COMMON mortgage mistake could be costing homeowners £19,000 over the life of their loan – but an expert explains how to avoid shelling out more than necessary.

Those lucky enough to have enough cash in the bank for a deposit need to be aware of the hidden cost of picking a longer mortgage term.

Here's why taking out a longer term mortgage could see you paying £19,000 extra in interest repayments

1

Here’s why taking out a longer term mortgage could see you paying £19,000 extra in interest repayments

A mortgage term is the amount of time it takes to pay off your loan – you can choose to take out a shorter term or a longer one.

Shorter terms are usually considered to be 20 years or less, while a term of 30-years is classed as a longer term.

The most common mortgage term is a 25-year mortgage, but you could pick one which runs for as long as 40 years.

As house prices continue to soar, choosing a longer mortgage term is one way that buyers can lower their monthly repayments – but it comes at a price.

MORE money changes coming this month that you need to know about
I'm a property expert - is NOW the time to buy as house prices go up?

Opting for a longer term could mean that you’re paying much more in interest repayments than you would otherwise, Coreco technical director Nick Morrey warns.

He has decades of experience dishing out mortgage tips, and is one of the experts on The Sun’s Squeeze Team panel.

If you’re worried about how to make ends meet, are struggling to pay off your debts or don’t know how best to manage your cash, get in touch by emailing Squeezeteam@thesun.co.uk.

Andrew’s money saving tips will come in use as rising interest rates could add £612 onto your mortgage repayments.

The Bank of England hiked interest rates to 1% earlier this month – making the cost of borrowing from loans, credit cards and mortgage repayments more expensive.

Anyone with a variable or tracker mortgage will feel the pinch quickest, as these deals are linked to the Bank’s base rate – when it goes up, so do your monthly repayments.

Here’s why taking out a longer term mortgage could add £19,000 onto your repayments.

Higher interest repayments – up to £19,000

Taking out a longer term mortgage might be tempting initially.

Your repayments are spread over a longer period of time – which means that the amount you pay back each month will be lower.

This could be attractive – especially as households are having to pay more for other bills like energy, food and fuel each month.

But if you can afford to meet higher repayment rates, it may make sense to choose a shorter mortgage term.

The shorter your mortgage term, the less time there is for interest to rack up, adding to the total amount you repay over the period of your loan.

For example, on a £250,000 mortgage at an interest rate of 2.5% with a 25-year term, your monthly repayments would be £1,122.

The total amount you would repay in interest over the 25 years before you clear your mortgage is £86,506.

If instead you opted for a 30-year term, your monthly repayments would drop to a more manageable £988. But you’d pay a total of £105,662 in interest.

“The 30-year term is £19,146 more expensive due to the extra five years having interest charged on it,” Mr Morrey said.

“So while long mortgage terms are very helpful to minimise monthly cost but as you pay interest for a long time the total cost can be significantly higher.

“If you can afford to reduce the term in any way, which could be through higher payments or regular or ad hoc over payments, then that is usually a good idea.”

How else could a longer term mortgage affect me?

Taking out a longer mortgage term could also affect when you’re able to retire.

If you’re paying back your mortgage over a longer period of time, you’ll most likely need to keep working to have the funds available to meet the repayments.

“When people opt for a term that means they are still paying it back beyond the age 70, it may well mean that retirement cannot occur before that age when perhaps it should,” Mr Morrey said.

“You may have plans to clear the balance before then, but if those plans don’t materialise then you could be faced with working longer than perhaps you should.”

One option that buyers could take is to get a long mortgage term initially, and then reduce it when they come to remortgage and potentially have a higher salary and can cope with larger repayments.

It’s important to review your mortgage deal regularly anyway, as there might be better rates available, which could also cut your costs.

A new plan has recently been launched that could help first-time buyers get on the ladder – we explain what it is.

While another mortgage expert explains the tricks to getting your application approved as it gets harder to clinch a deal.

We pay for your stories!

Do you have a story for The Sun Online Money team?



[ad_2]

Source link

Previous Post

Shooter who killed Sweetie Pie’s reality TV star pleads guilty, implicates others | Law and order

Next Post

Home Equity Loans Are Making a Comeback. 4 Experts Predict the Rates You Can Get This Year

Next Post
Home Equity Loans Are Making a Comeback. 4 Experts Predict the Rates You Can Get This Year

Home Equity Loans Are Making a Comeback. 4 Experts Predict the Rates You Can Get This Year

Popular Posts

Ajanta Pharma : Newspaper Advertisements
Life insuranace

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

by Matthew Upton
July 28, 2022
0

Close Provided by: TAIMING ASSURANCE BROKER CO.,LTD. SEQ_NO 4 Date of...

Read more

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

20% interest rate on credit cards! Here’s how to avoid paying those high rates :: WRAL.com

Sens. Murphy, Blumenthal, Colleagues Reintroduce the Behavioral Health Coverage Transparency Act – InsuranceNewsNet

$1 billion in loans still available for agricultural funding in Ohio

How Long Do Car Accidents Stay on Your Record?

Rocket Mortgage Classic Wagers: Pick To Finish Top-10

Load More

Popular Posts

Hingham DPW Workers Deserve Respect, Decent Wages and Affordable Health Insurance

Hingham DPW Workers Deserve Respect, Decent Wages and Affordable Health Insurance

by Matthew Upton
July 5, 2022
0

Propy introduces blockchain title and escrow service

Propy introduces blockchain title and escrow service

by Matthew Upton
May 26, 2022
0

Biden administration sued after fertility awareness methods cut from health coverage

by Matthew Upton
June 15, 2022
0

Ajanta Pharma : Newspaper Advertisements

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

July 28, 2022

20% interest rate on credit cards! Here’s how to avoid paying those high rates :: WRAL.com

July 28, 2022
Edelweiss General Insurance launches India’s first on-demand, mobile telematics-based comprehensive motor insurance – SWITCH

Sens. Murphy, Blumenthal, Colleagues Reintroduce the Behavioral Health Coverage Transparency Act – InsuranceNewsNet

July 28, 2022

Categories

  • Assets
  • Banking Laws
  • Finance Laws
  • Health Insurance
  • Home Insurance
  • Interest Rate
  • Life insuranace
  • Loans
  • Mortgages

Tags

home loans mortgage personal loan
  • Privacy Policy
  • contact us

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

No Result
View All Result
  • About Us
  • contact us
  • Home
  • Home 2
  • Home 3
  • Privacy Policy

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.