If you decide to take out a longer term mortgage this can help to cut your monthly repayments, and it seems that many homebuyers are opting to borrow for longer, with many first-time buyers taking out mortgages with terms of more than 25 years.
More longer term mortgages
Around 66% of mortgages taken up by first-time buyers have terms that last 25 years or more, at least according to the FCA. Back in 2006, this was only around 33% of first-time buyer mortgages.
During the financial crash, only 14 percent of mortgages lasted longer than 25 years, but now that number has climbed to 41%. Resulting in the median mortgage term rising to 30 years for those getting their very first home.
Why are homebuyers taking longer mortgage terms?
Issues with affordability have been cited by the FCA as one of the key reasons why would-be homeowners are choosing to borrow for longer. Another key reason was the decline in interest-only mortgages. These days, interest-only mortgages make up just four percent of the market.
With more longer term deals comes more people borrowing beyond the projected retirement age. Again according to FCA figures, five years ago 26 percent of mortgages terms lasted until the borrower was around the age of 66. Now though, that figure has increased, as by 2018 it had risen to 30%. 4 percent can seem like a relatively small increase but in this case that rise represents around an extra 411 thousand mortgages.
Should you consider getting a longer term mortgage?
More and more lenders are increasingly offering maximum mortgage terms of 35 or even 40 years. While it’s true that your monthly payments will be lower over a longer term, you’ll also end up paying more into the mortgage.
If you’re unsure what term to choose for your mortgage, it’s essential that you seek out the professional help of mortgage experts. They will be able to offer you experienced guidance and compare a wide range of options for you with little effort.
At Taylormade, our mortgage advisors can guide you through the whole process, searching the mortgage market to find the best deal for your individual circumstances. Let us take away the hassle of the whole process, while saving you time and money.
Get in touch with us today on 0345 305 2540, or info@taylormade-finance.co.uk.
