Mojo Mortgages’ data has revealed that extending a mortgage from 25 to 35 years can cost the average first-time buyer an extra £87,180.
John Fraser-Tucker, head of mortgages at Mojo, says: “Our research has found with the current average mortgage rate for a two-year fix (75% LTV) at 5.44%, the total cost of an average-priced house (£285,000) varies significantly on the loan term.
“For a 25-year loan term, the total mortgage cost would be £391,200, which includes the principal amount and interest charges. However, if you extend the loan term to 35 years, the same house will cost an additional £87,180, bringing the total cost to £478,380.”
Based on the average mortgage rate and house price, extending your mortgage rate by one year can cost an additional £8,472; two years can cost an additional £17,040; and five years can cost an additional £42,600.
A table from Mojo gives a regional breakdown of the financial implications of extending mortgage terms by 10 years (from 25 to 35 years) across different parts of the UK. This data, based on the current average mortgage rate of 5.44%, reveals significant variations in the additional costs incurred when opting for a longer mortgage term.
Region | Average house price | 25-Year Mortgage Term: Monthly mortgage Payment / Mortgage Total | 35-Year Mortgage Term: Monthly mortgage Payment / Mortgage Total | Extra Cost of Extending Your Mortgage by 10 Years |
London | £523,376 | £2,396 (£718,800) | £2,092 (£878,640) | +£159,840 |
South East | £375,693 | £1,720 (£516,000) | £1,502 (£630,840 | +£114,840 |
East of England | £337,757 | £1,546 (£463,800) | £1,350 (£567,000) | +£103,200 |
South West | £318,223 | £1,457 (£437,100) | £1,272 (£534,240) | +£97,140 |
West Midlands | £250,787 | £1,148 (£344,400) | £1,002 (£420,840) | +£76,440 |
East Midlands | £245,574 | £1,124 (£337,200) | £981 (£412,020) | +£74,820 |
North West | £217,525 | £996 (£298,800) | £869 (£364,980) | +£66,180 |
Wales | £216,002 | £989 (£296,700) | £863 (£362,460) | +£65,760 |
Yorkshire and The Humber | £209,055 | £957 (£287,100) | £835 (£350,700) | +£63,600 |
Scotland | £191,435 | £876 (£262,800) | £765 (£321,300) | +£58,500 |
Northern Ireland | £178,499 | £817 (£245,100) | £713 (£299,460) | +£54,360 |
North East | £162,360 | £743 (£222,900) | £649 (£272,580) | +£49,680 |
So in summary, a longer mortgage term can cost Londoners an extra £160,000: Topping the list, London homeowners face the highest additional costs. While extending the mortgage term from 25 to 35 years reduces monthly payments by £304, it adds a staggering £159,840 to the total mortgage cost. On a typical London property priced at £523,376, this means paying £878,640 over 35 years instead of £718,800 over 25 years.
The South East follows suit with an additional cost of £115,000: In the South East, first-time buyers can save £218 per month by opting for a 35-year term, but this seemingly small difference accumulates to an extra £114,840 over the loan’s lifetime. The total mortgage cost jumps from £516,000 to £630,840 on an average house price of £375,693.
Extending your mortgage by 10 years in the East of England will cost an average of £104,000 extra: Homeowners in this region might save £196 monthly with a longer term, but they’ll pay an additional £103,200 in total. The mortgage cost for an average £337,757 property increases from £463,800 to £567,000.
Unsurprisingly the North East sees the smallest impact – less than £50,000: The North East sees the smallest impact, with an additional cost of £49,680 when extending the mortgage term. This correlates with the region having the lowest average house price at £162,360.
