Third of first time buyers opt for 30-year mortgage

January 27, 2017 by Brendan O'Neill

Borrowers

According to recent research by the Halifax, just under a third of first time buyers are now opting for mortgages which run for 30 or 35 years.

The study looked at figures for 2016, which indicate that 28% of first time buyers take out mortgage deals which last for 30-35 years, in comparison to just 11% in 2006. As the traditional mortgage term of 25 years seems to be less favourable, it appears that many of the latest buyers will still be repaying their mortgage debt when they are aged between 60 and 70, possibly during retirement.

Last year, the average price paid by first time buyers for a home in the UK, soared to £200,000, while in London, the average price paid by a first time buyer increased to £400,000. Some of the factors which are influencing the decision for people to buy property later, include student debt, having children later, and soaring house prices. As people buy their home later in life, they also opt for longer mortgage terms, which may make repayments more affordable for those with a limited budget.

Mortgage terms at the Halifax are available up to 40 years, although the lender does warn that buyers will pay more interest over the life of the term. However, it does make the monthly repayments easier to manage.

First time buyers who are looking for the best deals and would like to borrow over a shorter mortgage term, may want to speak to a mortgage adviser, as they have studied for a CeMAP qualification.