According to a leading mortgage broker, a traditional 25-year mortgage has little future in the modern world.
David Hollingworth, from London & Country mortgage brokers, was prompted to make the statement following the release of data by the Bank of England. During the first quarter of 2017, mortgages with terms of 35 years or greater accounted for 15.75% of all new mortgages. Although this is slightly lower than the 16.36% of mortgages with terms of 35 years or more recorded at the end of 2016, the figures still highlight the increase in longer-term mortgages.
Official figures indicate that one borrower in six is taking on a mortgage with a term of 35 years or more, which may mean that borrowers are still paying off the debt when they are in their 70s. The figures have been revealed as the Bank of England warns that consumer debt is increasing. One of the benefits of borrowing over a longer term is that monthly repayments are lower. However, the overall cost of the mortgage can add up to thousands extra.
According to Hollingworth, there are some lenders who will happily lend over a 35-year period, with some approving terms of 40 years. Lenders are also increasing the maximum lending age too, with the maximum age at the Halifax being 80.
Although it may seem like a preferable option to borrow over a longer term, it’s advisable to speak to a CeMAP qualified mortgage advisor who can help you calculate the overall cost.
