Borrowing For Longer Will Assist Some Buyers

While many people still view the traditional mortgage length as being 25 years, it is fair to say the market has changed in recent times. There is a growing number of mortgages made available to property buyers which last for 40 years. These mortgages are growing in popularity, although it opens up the possibility many borrowers will never fully pay off their debts.

There is an apparent reason why homebuyers want to take a mortgage out over a more extended period. A longer period means lower monthly payments, and it also provides buyers with access to larger loans.

Even though lenders have imposed stricter criteria on loans in recent times, taking a loan out over a much more extended period creates freedom and flexibility for borrowers. Also, lenders have to make commercial decisions, and they want to welcome as many borrowers as they can. Therefore, there is a positive aspect to longer mortgages for lenders too.

40 year mortgages are on the rise

Information provided by Moneyfacts indicates six in 10 mortgage deals come with a standard maximum term of 40 years. This comes at the same time; many lenders have increased their maximum age limits. With the age of first-time buyers rising, it is not out of the question for some first-time buyers holding a mortgage which isn’t due to be paid off until they are in their 70s or even their 80s.

Of course, with the pensionable age rising, people are likely to be working longer if they are still in good health. It should be remembered healthcare advances, and people taking more exceptional care of themselves has created a situation where people are living healthier and for longer. There is an ageing population in the United Kingdom, and perhaps the new wave of mortgage offers reflects this, as opposed to being anything more concerning.

First-time buyers want flexibility with their mortgage

The Yorkshire Building Society has recently started offering this style of mortgage, and they have researched the process. They suggest 40-year mortgages have been driven by increased demand for more affordable monthly payments. With a rise in first-time buyers purchasing more substantial and more expensive homes; this is a valid argument.

It has been pointed out that more first-time buyers are overlooking the traditional first home, focusing on more extensive and more spacious homes. This approach costs more upfront, but in the longer term, it may reduce the overall house moves a person, or household makes, saving them money.

Yorkshire Building Society’s Charles Mungroo said: ‘Attitudes of first-time buyers are altering, with an increased demand for larger homes compared to the traditional ‘starter home’ that was once standard to get on the property ladder. Along with more purchases being made later in life and families having to juggle multiple financial commitments, there is a real demand in borrowers wanting to stretch their terms to make their monthly payments more affordable along with borrowing later into life.’

There are concerns for buyers taking out a longer mortgage, but there are concerns with all mortgages. If a buyer researches their options and makes an informed decision, they should find a suitable mortgage for their needs.

If you’d like to get in touch with us to discuss all your possible options, we’re always here to help. With mortgage brokers in Woking and Camberley, you are never too far from mortgage advice.

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