Younger buyers opting for longer-term mortgages

October 20, 2017 by Brendan O'Neill

Borrowers

According to recent data, young buyers are more likely to take out a longer-term mortgage to help cope with the pressure of their short-term finances.

The number of buyers taking out a mortgage with a term between 31 and 35 years has doubled during the last decade. For buyers, this means that monthly repayments will be far lower, but the overall cost of the mortgage will be far higher, running into tens of thousands of pounds.

The information, from L & C Mortgages, shows the average mortgage term is steadily increasing from 25 years and is now more likely to be 27 years. Mortgage terms between 21 and 25 years were the average option for 59% of first-time buyers in 2007. That figure has fallen to 39% today. Just over a fifth of first-time buyers has opted for a mortgage term between 31 and 35 years this year, while in 2007 that figure would have been just 11%.

A mortgage of £150,000 at 2.5% over 25 years would cost £51,879 overall. Opting for the longer 35-year-term would cost a total of £75,221. However, the monthly repayment would be £136 lower than a 25-year-term. According to David Hollingworth, from L & C Mortgages, first time buyers do not have the same access to interest only mortgages as they did 10 years ago, and often need much larger deposits.

Mortgage advisors have undertaken comprehensive training on CeMAP training courses, meaning they can help buyers to make decisions.