More buyers taking 35-year mortgage terms
More first-time buyers are opting for 35-year mortgage terms, according to the annual Halifax First-Time Buyer Review.
The review says that 26 per cent of buyers took 35-year mortgage terms in 2015. This is up considerably compared to 2007 when borrowers typically took terms between 20 and 25 years.
Aaron Strutt, product manager at Trinity Financial, says: “A standard 25-year mortgage term would make it almost impossible for many first-time buyers to get on the property ladder.
“Halifax and Nationwide actually offer younger borrowers a 40-year mortgage term. Virgin Money and Santander cap the maximum terms at 35 years.”
Latest data highlights that 88% of new mortgages are on a capital repayment basis. While the average first-time buyer paid £190,000 for a house in 2015, up 10% on the year before.
Monthly repayments for longer terms
A £250,000 mortgage taken over a 25-year term would cost £1,059.64 each month if the interest rate was 2%.
This reduces to £828.16 each month over a 35-year term. If you are young enough to qualify for a 40-year term, the repayments drop to £757.06.
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For help to secure a mortgage with a longer term, call Trinity on 020 7016 0790.
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