Harry is in his late forties and had to sell his house after he divorced. He has a £100,000 deposit, his share of the proceeds. He wants to buy a small flat within commuting distance of London and is thinking of paying about £150,000 to £200,000. He is paying maintenance and can afford monthly repayments of £700. He doesn’t want to be saddled with a mortgage for the rest of his life so would be looking for a 10 to 15-year loan repayment plan. Would he be able to get a repayment mortgage in this range for the amount he can afford? If not, what are his options?

Simon Tyler, of Chase de Vere Mortgage Management, says: Being in his late forties, Harry is quite right to want to pay off his mortgage early. Apart from anything else, taking a 25-year term at this stage may not be possible if the loan period creeps into his retirement and he is unable to show he could meet the repayments when he stops work.

Either way, there is nothing compelling borrowers to take mortgages over 25 years and shorter terms are easy to arrange, whether over 10, 15, 20 years or anything in between. Clearly, however, repayment mortgages over shorter time periods are more expensive — the shorter the term the higher the capital repayments must be to pay off the mortgage on time.

But Harry is in quite a good position. With £100,000 to put down as a deposit, he need borrow only £50,000 to £100,000 to get the property he is looking for. One interesting option would be for Harry to fix for the 15-year term, meaning he need never worry about interest-rate rises. Abbey offers a 15-year fix at 5.49 per cent, which would allow Harry to borrow a touch under £85,000 with repayments of £700 a month.

That is quite a good option, given that it is fully portable so could be moved to another property if Harry moves again, but it is quite inflexible: early repayment charges apply for the whole 15-year term, which Harry should consider before committing.

Alternatively, Harry could try to find a fix for shorter periods and review his mortgage at a later date. That would benefit Harry if interest rates were lower in a few years’ time than they are today.

Alliance & Leicester offers a two-year fix at 4.99 per cent, which is cheaper than the 15-year deal; £700 repayments would enable Harry to borrow just over £87,000. But he would need to remortgage again in two years’ time and that would mean another mortgage arrangement fee and quite possibly some other costs as well.

Nationwide offers a five-year fix at 5.34 per cent. Repayments of £700 a month on this rate would enable Harry to service a mortgage of just over £86,000.

We wouldn’t normally recommend a variable-rate loan given that Harry has a pretty firm cap on what he can afford to pay. However, he may still be tempted by the term tracker pegged at 0.04 per cent above the base rate from Chesham Building Society, which would mean repayments of £700 for a £87,000 mortgage. He must remember, though, that interest rates are expected to rise at least one more time this year and further rises beyond that cannot be ruled out. Each 0.25 per cent rise on an £85,000 mortgage would add only about £11 a month to the repayments.

Given the relatively small additional cost, it may be a risk Harry is prepared to take in return for keeping the flexibility for the rate to fall as and when interest rates are cut again.

Chase de Vere Mortgage Management: 0800 3580538

FANCY A MORTGAGE MAKEOVER? E-mail: property.consumer@thetimes.co.uk with your daytime telephone number. You must be prepared to state your income.

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