Homeowners are increasingly paying off their mortgages well into their 70s, with some mortgage deals lasting more than 40 years.
Traditionally, mortgages lasting more than 25 years were extremely rare, but the maximum length of time in which borrowers can repay their loans has increased in recent years.
51 percent of mortgage deals on the market are now available over a maximum period of 40 years - an increase from 36 percent in 2014.
In contrast, just 3 percent of deals require borrowers to repay within 25 years, a drop from 7.5 percent in 2014.
Experts believe the rise of longer mortgages is in part due to increasing property prices which are growing faster than the average wage. With homes becoming increasingly unaffordable for many, home buyers are having to take out bigger loans than ever before. By spreading the loan over a longer period of time, monthly repayments can be more manageable.
However, the downside of longer mortgages is that they tend to be much more expensive than loans spread out over a much shorter period of time.
This is because the loan is susceptible to a larger amount of interest as there’s more time for the interest to accrue.
With the average first time buyer now aged 30 or above, more homeowners than ever before will be in their 70s or even 80s before they’ve paid off their mortgages
Darren Cook, finance expert at Moneyfacts.co.uk said: “Historically, a standard mortgage term generally amounted to a period of 25 years, but most products are now available to be extended for a period of 40 years.
“A longer term mortgage may reduce the monthly repayments of a mortgage, however, the additional interest that accumulates over an extended mortgage term could be considerable.
“A £200,000 repayment mortgage at a rate of 2.50 percent over 25 years equates to a monthly repayment of £897.23 and total interest payable would be £69.169 over the term.”
