Financial Ponderings

My online money lobe

Mortgages: Longer terms can really hurt February 26, 2008

Filed under: Mortgages — financialponderings @ 3:14 pm
Tags: , ,

I’ve been thinking a lot about mortgages recently. To get straight to the point, my finances are not ‘all that’ so I have been weighing-up my options on the mortgage front – to see if any savings can be made. I have considered going interest-only, but as I am currently repaying over 38 years, it doesn’t make that much of a difference. I’m tied in for another 18 months anyway, so there’s not much I can do right now.

In my searching for ideas, I stumbled across this post at My Money Blog. It didn’t really answer any of the questions I had, but the graph showing monthly payment vs term length really hit me hard.  To quote: “The graph shows that mortgage payment stops decreasing very much as the term goes past 20 years, and really starts to flatten after 30 years.”

Here I am on a 38 year mortgage. Basically, my monthly payment isn’t that much less than if I was paying over 30 years – the only real difference is the amount of interest I am paying. I felt a little sick at that thought. Especially as my financial situation at the moment won’t let me change that.

So here is my 1st goal. In 18 months (when the tie-in period on my current mortgage ends), I want to be in a financial situation that allows me to reduce my term to a more realistic 25 years. It’s going to take a lot of hard work, but it will be worth it.

If you are on a long-term mortgage, i’m not sure whether I would recommend reading the article at My Money Blog. It may give you the motivation to do something about it – which is a good thing, but it will also hurt to see just how much you are paying out for relatively little in return…

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2 Responses to “Mortgages: Longer terms can really hurt”

  1. Hi,
    I like the way you write ..Its really different and interesting … keep the momentum going ..I hope tis will really going to help me in future..
    brilliant. .

  2. financialponderings Says:

    Thanks.

    Btw, if you would like a review of offsetmortgagecentre.co.uk, I’d be happy to write one in a different and interesting way 😉 – on this blog, or another. Thanks again


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