25-year mortgage may no longer be sufficient
Published On 20 February 2007
As house prices continue to increase, planning ahead may prove the key to financial happiness as figures show 25-year mortgage plans may no longer be sufficient for many home buyers, according to research from Moneyfacts.co.ukSome 38 per cent of people looking for a mortgage are now considering a mortgage term of more than 25 years, the survey found.
Eight out of ten lenders are willing to meet demand by offering mortgage terms in excess of 25 years.
A quarter of lenders are now offering a 40-year mortgage term, and some even offer mortgages of up to 52 years.
Analyst at Moneyfacts.co.uk Julia Harris said: "Extending the term of your mortgage will undoubtedly lower your monthly repayments and can be a useful means of initially affording the mortgage until your salary increases, but the longer you stay on a long term mortgage, the more you will see your interest costs spiral."
"Based on a 25-year repayment mortgage of £130K at 5.25 per cent, extending the term by just five years will increase the total amount payable by almost £25K, while increasing to 40 years adds a whopping £77.5K interest to your bill."
Moneyfacts interviewed 1,760 potential housebuyers.
