Revealed – how much does a 50 year mortgage really cost?

New research by estate and lettings agent, Barrows and Forrester, uncovered the interest rates that homebuyers with a 50-year mortgage are likely to incur.

Boris Johnson previously announced that ‘ultra-long mortgages’ were being considered as a ‘creative way’ to help prospective buyers purchase a home.

By analysing the cost of interest paid over a 50-year term the estate and lettings agent was able to give insight into the true cost of a 50-year mortgage.

Long-term mortgage costs 

In the UK, based on a 75% loan to value, the average homebuyer needs to borrow £210,872 once a 25% deposit (£70,290) has been placed.  

Mortgages lasting 40 years that are currently on the market have an average fixed rate of 6.19%. This would require a monthly repayment of £1,140 and £1,088 worth of interest would be paid on the loan. 

According to Barrows and Forrester‘s calculations, 50-year mortgages would pay a total of £472,984 in interest alone. This hefty sum is over double the amount homebuyers initially borrowed. 

The total cost of the loan then brings this figure up to £683,855. Then when the 25% deposit is added into the equation homeownership totals a painstakingly high £754,145. Overall this is nearly three times the original value of the property.

Barrows and Forrester estimate that when considering historic inflation rates and inflation going forward, this average property value could climb to almost £2.3m. This would mean that those who make use of a 50-year mortgage could benefit from a healthy return on their investment.

James Forrester, managing director of Barrows and Forrester, concludes: “There’s certainly nothing creative about the government’s manipulation of the housing market. Their failure to build more homes while consistently introducing schemes to boost buyer demand has caused house prices to climb to record highs.” 

“Now they’re considering snaring buyers into 50-year mortgage terms, a move that plays on the desperation of many to own their own home, who simply can’t contend with the high price of buying in today’s market.”

“In doing so, these buyers would essentially be stuck renting from the bank well into their golden years, paying exuberant levels of interest for the pleasure of doing so.”