According to a report released by the Mortgage Advice Bureau (MAB), the number of home buyers searching for a mortgage product which has a term of 30 years or more, has increased.
Experts have cited the recent news that the Bank of England may increase the base rate early next year, which will result in higher borrowing costs. Over 20% of potential home buyers had searched for a long term loan of 30 years or more between April and June 2015, compared with last year’s figure of 8%. Currently, the typical mortgage term is 25 years, but home buyers are searching for a way to lower monthly repayments if mortgage rates do soar.
Property buyers may face problems if they have waited until their mid-thirties to make a purchase and want a longer term mortgage, due to the tough new affordability rules which have been introduced. Many lenders expect a mortgage to be repaid by the age of 65 and won’t offer longer terms. The MAB added that if a home buyer increases the term, they face paying back significantly more than if they borrowed over a shorter term, as more interest will be paid over a longer period of borrowing.
Mortgage advisers study for a CeMAP course, so that they will be able to help those buying a property to find the most suitable deal for their circumstances. Longer term mortgages cost more than those which are borrowed over 25 years or less.