New buyers look ahead to 52 years of mortgage payments

Posted: 20 Feb 2007 11:02:20 GMT

First-time buyers are increasingly opting to extend the term of their mortgages beyond the traditional 25 years in order to cut monthly payments, a study has claimed

First-time buyers are increasingly opting to extend the term of their mortgages beyond the traditional 25 years in order to cut monthly payments, a study has claimed.

Extending the repayment term – by up to 52 years in some cases – can cut monthly payments by as much as £170, but could be more expensive over the full loan term.

Moneyfacts, which conducted the research, estimated that with additional interest extending a 25-year term at 5.25 per cent to 30 years could cost almost £25,000 more.

"Eight out of ten lenders now offer maximum mortgage terms in excess of 25 years," said Julia Harris of Moneyfacts.

"A quarter of lenders are now offering a 40 year mortgage term and a handful is offering the maximum possible term of 52 years.

"Extending the term of your mortgage will lower monthly repayments but the longer you stay on a long term mortgage, the more you will see your interest costs spiral."

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