When I took out my first mortgage only a few years ago, I did so without any knowledge of how mortgages work.
The amount of different mortgages was one thing, but what really annoys me now, is that I was never advised how much more my house was going to cost me by taking out a full 25 year mortgage as a pose to reducing the amount to say 20 years.
Now this is all relative to the amount you can afford, not just now but in the future, and particularly taking into account how interest rates will change.
But let me give you an example.
Let me give you an example of a £200,000 mortgage.
If you took out a £200,000 mortgage over 25 years with an interest rate of 7% the total cost of your mortgage would be £424,068 and your mortgage would cost you £1,413.
56 per month.
(1,413.
56 x 12 x 25) Now if you took the same £200,000 mortgage over 20 years with an interest rate also of 7% the total cost of your mortgage would be 372,144 and your mortgage would cost you £1,550.
60 per month.
(1,550.
60 x 12 x 25) That is a saving of £51,924 whilst your mortgage cost goes up by £137.
04 per month.
Now obviously your interest rate will not stay the same over the life of your mortgage, and savings will vary depending on the interest rate and amount of the mortgage, but I have used the above as an example of the savings you could make by reducing the term of your mortgage.
The above is only an example, and I must stress that you will have to research your own mortgage costs, as well as ensuring you can comfortably afford any additional monthly payments taking into account interest rate changes.
Carrying out your own research is simple, just type 'mortgage calculator' into any internet search engine.
Once you have found a calculator to use, have a bit of a play around with the amount of years and different interest rates to see how much you could save.
The calculator will also help you see how differing interest rates will impact on your monthly mortgage payment.
Not only will this save you money, but will also take years off your mortgage! Please, please, please, do not be tempted to reduce the length of your mortgage at the risk of being unable to afford your monthly mortgage payments.
At the end of the day, you want to keep your house! Cary
The amount of different mortgages was one thing, but what really annoys me now, is that I was never advised how much more my house was going to cost me by taking out a full 25 year mortgage as a pose to reducing the amount to say 20 years.
Now this is all relative to the amount you can afford, not just now but in the future, and particularly taking into account how interest rates will change.
But let me give you an example.
Let me give you an example of a £200,000 mortgage.
If you took out a £200,000 mortgage over 25 years with an interest rate of 7% the total cost of your mortgage would be £424,068 and your mortgage would cost you £1,413.
56 per month.
(1,413.
56 x 12 x 25) Now if you took the same £200,000 mortgage over 20 years with an interest rate also of 7% the total cost of your mortgage would be 372,144 and your mortgage would cost you £1,550.
60 per month.
(1,550.
60 x 12 x 25) That is a saving of £51,924 whilst your mortgage cost goes up by £137.
04 per month.
Now obviously your interest rate will not stay the same over the life of your mortgage, and savings will vary depending on the interest rate and amount of the mortgage, but I have used the above as an example of the savings you could make by reducing the term of your mortgage.
The above is only an example, and I must stress that you will have to research your own mortgage costs, as well as ensuring you can comfortably afford any additional monthly payments taking into account interest rate changes.
Carrying out your own research is simple, just type 'mortgage calculator' into any internet search engine.
Once you have found a calculator to use, have a bit of a play around with the amount of years and different interest rates to see how much you could save.
The calculator will also help you see how differing interest rates will impact on your monthly mortgage payment.
Not only will this save you money, but will also take years off your mortgage! Please, please, please, do not be tempted to reduce the length of your mortgage at the risk of being unable to afford your monthly mortgage payments.
At the end of the day, you want to keep your house! Cary
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