Reply to: 40 year fixed rate mortgage

[_V_]

So 5.55% for 40 years, with 10% deposit and total safety of brick and mortar that will certainly double in price over 40 years.

As a BTL mortgage that would be amazing, all the free, leveraged equity gain. Young people will retire like kings with 10 or 20 of these in the South East.

[AtW]

It's take off that could be worse - if something crashes and it's full of jet fuel...

[ladymuck]

Hope you checked airport landing approaches...

It's take off that could be worse - if something crashes and it's full of jet fuel...

[AtW]

Shhh, don't talk Birmingham up just yet. Wait until I move into my new Solihull house then we can big up the area and push prices up nicely

Hope you checked airport landing approaches...

[DealorNoDeal]

That's my understanding, but I'm not sure if borrowing multiples will remain the same. It's a good point now I mull on it further

If you wait a bit longer, we might see DFS-style "4 years interest free with nothing to pay for the first year" mortgages.

[ladymuck]

You mean, for a given income, they will let you borrow more with the 40-year than a 25-year?

That's my understanding, but I'm not sure if borrowing multiples will remain the same. It's a good point now I mull on it further

[Andy2]

so not only economy is going the way of japanese zombie economy but the mortgages will also be longer like japan

[DealorNoDeal]

But then you'd be comparing apples with oranges in terms of products as the size of borrowing is likely to be different for the different terms.

You mean, for a given income, they will let you borrow more with the 40-year than a 25-year?

[ladymuck]

I think jayn200 meant that you could get a 25-year mortgage, with a lower interest rate than 5.5%, and that might work out cheaper per month.

Yes you probably could, especially with interest rates where they are at the moment.

But then you'd be comparing apples with oranges in terms of products as the size of borrowing is likely to be different for the different terms.

[Whorty]

Then they certainly can’t afford 40 years of this debt slavery - they should move to Bham where real estate is reasonably priced and it will only require them to have 39 year mortgage

Shhh, don't talk Birmingham up just yet. Wait until I move into my new Solihull house then we can big up the area and push prices up nicely

[DealorNoDeal]

utter rubbish.

The monthly payments will be lower.
Take a £100k mortgage with 5.5% interest, payable over 40 years = £515.77 p.m.
over 25 years £614.09 p.m.

I think jayn200 meant that you could get a 25-year mortgage, with a lower interest rate than 5.5%, and that might work out cheaper per month.

[Lance]

And total amount payable over 40 years, £247,570, versus £184,226 on a 25 year term.

But, I'd agree its good that the market is offering this product, especially with the ability to overpay and the flexibility to exit.

What it allows is someone to minimise their monthly payments in the short term. I can't see anyone being on this for 40 years. It's crazy.
Longest mortgage I ever had was 3 years. Interest rates are not going to do an early 90s (15%) again for the next decade at least, if ever.

[ladymuck]

Then they certainly can’t afford 40 years of this debt slavery - they should move to Bham where real estate is reasonably priced and it will only require them to have 39 year mortgage

If there's an influx of people to B'ham, surely prices will go up and that year shaved off will become an extra 5. But it's a sterling effort to get your flat to increase in value.

[AtW]

The people who take out this mortgage are not the people who will spend £100/month on two meals out.

Then they certainly can’t afford 40 years of this debt slavery - they should move to Bham where real estate is reasonably priced and it will only require them to have 39 year mortgage

[Paralytic]

100 quid difference is one OK restaurant (outside of London) for two per month, with just one bottle of house wine

Better have a 2nd job than wait 40 years to “own” your place

The people who take out this mortgage are not the people who will spend £100/month on two meals out.