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With many consumers struggling financially, Moneyfacts.co.uk latest research showing that over half of residential mortgages now have a term of up to 40 years will be good news, as it will mean more borrowers will be able to spread their mortgage repayments over a long time period.
Research by Moneyfacts.co.uk found that 2,782 (57.01%) of residential mortgage products currently available have a standard maximum mortgage term of up to 40 years.
Products at maximum mortgage term (residential mortgages)
Max term | 40 years | 35 years | 30 years | 25 years |
Oct 2018 | 2,412 (55.55%) | 1,645 (37.89%) | 136 (3.13%) | 149 (3.43%) |
Oct 2019 | 2,782 (57.01%) | 1,735 (35.55%) | 195 (4.00%) | 168 (3.44%) |
Darren Cook, finance expert at Moneyfacts.co.uk, said: “Historically, a standard mortgage term generally amounted to a period of 25 years, but a growing majority of products are now available to be extended for a period of 40 years. By extending their mortgage term, borrowers may be looking to reduce their monthly repayments and therefore are more likely to meet strict affordability requirements.
“Yorkshire Building Society is the latest mortgage provider to increase its maximum mortgage term criteria to 40 from 35 years, at the same time increasing its criteria on the maximum age of a borrower at the end of a mortgage from 75 to 80 years.
“It appears that mortgage providers are permitting extended maximum mortgage terms of up to 40 years in conjunction with extending the maximum age that a borrower may be at the end of a mortgage. Our recent research shows that more than four-fifths (83%) of residential mortgages can end when the borrower is 70 years of age or older.
“A longer-term mortgage may reduce monthly repayments, however, the additional interest that accumulates over an extended mortgage term could be considerable. For example, a £250,000 repayment mortgage at a rate of 2.50% over 25 years equates to a monthly repayment of £1,121.54 and total interest payable would be £86,463 over the term. However, the same mortgage taken over a 40-year term would reduce the monthly repayments to £824.45, but increase the total interest to be paid to £145,733, resulting in an additional £59,270 in interest.
“Furthermore, the longer a borrower extends their mortgage term, the older they will be when they have finally repaid their mortgage. An extended mortgage term may go beyond pension age, so it is imperative that these borrowers consider their options and attempt to make provisions if their personal circumstances change.”
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
While there has been a year-on-year increase in house prices, the housing market is at its slowest level of growth since April 2013, the latest Halifax House Price Index reveals
While there has been a year-on-year increase in house prices, the housing market is at its slowest level of growth since April 2013, the latest Halifax House Price Index reveals
Moneyfacts UK Mortgage Trends Treasury Report, not yet published, reveals that the average two-year fixed rate at maximum 95% loan-to-value (LTV) has increased by 0.05%.
Moneyfacts UK Mortgage Trends Treasury Report, not yet published, reveals that the average two-year fixed rate at maximum 95% loan-to-value (LTV) has increased
While there has been a year-on-year increase in house prices, the housing market is at its slowest level of growth since April 2013, the latest Halifax House Price Index reveals
While there has been a year-on-year increase in house prices, the housing market is at its slowest level of growth since April 2013, the latest Halifax House Price Index reveals
Moneyfacts UK Mortgage Trends Treasury Report, not yet published, reveals that the average two-year fixed rate at maximum 95% loan-to-value (LTV) has increased by 0.05%.
Moneyfacts UK Mortgage Trends Treasury Report, not yet published, reveals that the average two-year fixed rate at maximum 95% loan-to-value (LTV) has increased
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