Brokers driving 35-year mortgage trend

Mortgage brokers have backed new research from Halifax showing that one in four first-time buyers are now taking out longer mortgage terms of 35 years.

They report a steady increase in the number of first-time buyers opting for longer mortgage terms in order to make monthly payments more affordable.

Jonathan Harris, director of mortgage broker Anderson Harris, said it was no surprise that fewer young buyers were taking out the traditional 25-year term.

“We often advise first-time buyer clients to take the longest mortgage term possible.”

He said first-time buyers who are used to calling their landlord in the event of the boiler breaking should seriously think about factoring in upkeep of the property into their monthly budgets. 

“If they keep their mortgage payment as low as possible, any spare cash can be used on other homeowner expenses."

Harris said that a £150,000 mortgage on a two-year fixed rate charging 1.49% would cost £599 a month over 25 years, against £458 over 35 years, a saving of £141 a month.

“While a longer mortgage term cuts monthly payments, it costs more in the long run as you make more of them.

“One way round this is to overpay when you can. Most fixed-rate mortgages now allow borrowers to overpay by up to 10% of the mortgage amount per year without penalty.

“So if you can pay overpay each month you can pay the debt down at your own pace, but are not contractually obligated to, which allows you flexibility.”