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Is a long-term or short-term mortgage right for me?

When you take out a mortgage, you can specify the length of the term you require, so that you can be sure that you have sufficient time to repay the home loan. Of course, the lender may refuse a mortgage on the grounds that you want to repay over too long a term, especially if you enter retirement during that period.

A longer-term mortgage is the general option for many people, as it offers more time to repay the amount borrowed. However, it will take longer to repay the debt and it will eventually cost more. A short-term mortgage will be repaid far more quickly and will be cheaper over the term of the product, although you may struggle to repay the higher monthly amount.

There are other factors to consider when choosing the length of your mortgage. If you want to be mortgage free in retirement, you may want to opt for a term that ensures the loan is repaid before then. However, remember that your lender may not agree to the mortgage based on the term you would like. If the lender believes that you won’t be able to afford the repayments of a shorter-term product, they may reject your application. CeMAP courses ensure that mortgage advisors have the required knowledge to be able to calculate the overall cost of a mortgage, and help to select the most suitable term.

Another option is to borrow the money over a longer period of time, but make regular overpayments to repay the debt quicker.

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