Should You Lock Into A 35 Year Term Mortgage | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 02/09/2021

The number of mortgage deals offering a 35 year or over term has increased by 70% in just two years, research by the Financial Conduct Authority (FCA) and Quilter has found.

According to analysis of Freedom of Information (FOI) data obtained by the FCA, in March 2019 there were just 14,765 mortgage deals offering a term of 35 years or more, which had increased to 25,112 in March this year.

The advantage of a 35 year term mortgage

With house prices continuing to rise and wages struggling to keep up, affordability is a key issue for many first-time buyers looking to take their first step onto the property ladder. Spreading mortgage repayments over a longer term of 35 years or more, can however, help to lower the monthly repayments and make the mortgage more affordable. As such, for many first-timer buyers, especially those looking to buy a property on their own, spreading the repayments over a 35 year term may be the only way of securing a mortgage.

Couples looking to move to a larger property, for example when looking to start a family, may also be tempted to lock into a 35 year mortgage if it enables them to afford the mortgage on their ideal forever home. Those planning to start a family may also want to reduce mortgage repayments if one partner is planning to reduce the hours they work, or give up work altogether, while their children are young.

Clearly spreading the mortgage repayments costs over a 35 year term can be tempting for those looking to make their mortgage repayments more affordable, but there are also downsides to choosing a mortgage term of this length.

The downsides to a 35 year term mortgage

One of the main concerns with taking out a 35 year mortgage term is the risk that the borrower may still be making mortgage repayments in retirement. Although someone in their mid 20s may feel that a 35 year term provides enough time to repay their mortgage before they retire in their late 60s, but a growing number of consumers are not taking their first step onto the property ladder until their mid 30s and sometimes later. If those in their mid 30s or older take out a 35 year term mortgage they will likely still be making mortgage repayments into their retirement or having to continue working into their 70s. As such, they should consider their options carefully before choosing a mortgage term of this length.

Another downside to a 35 year term mortgage is that spreading the mortgage debt over a longer period of time increases the amount of interest borrowers pay. In fact, those on a 35 year term mortgage will be paying 10 years more interest than those who choose the traditional 25 year mortgage term, which can add thousands to the amount that has to be repaid.

Those considering a 35 year term mortgage should also keep in mind that a mortgage term of this length gives no room for extending the mortgage term in case borrowers have a sudden fall in income and need to look at ways of reducing their repayments.

Despite the affordability benefits, borrowers need to carefully consider whether a mortgage term of this length is the right option for them. There is the possibility of increasing mortgage repayments or shortening the mortgage term at a later date if the borrower’s affordability rises and the lender allows, but this may not to be possible for all mortgage borrowers. As such, those considering a 35 year term mortgage may want to discuss their options with a mortgage broker first, who should be able to advise them on what is the best term for their personal circumstances and affordability.

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