SALES NEWS: Many first time buyers choose 30 or 35 year mortgages
The traditional 25 year mortgage could be on the way out, according to a major mortgage lender, as growing numbers of first time buyers now choose deals lasting 30 or 35 years.
The Halifax says that in 2016, some 28 per cent of all first time buyers with a mortgage opted for a 30 or 35 year term – the highest proportion ever.
A decade ago, only 11 per cent of first time buyers chose a term beyond 25 years.
This growing trend is down partly to the increase in house prices, although it is also accounted for by people living longer and therefore lenders having a much wider range of competitively priced mortgages stretching over longer periods.
The Halifax and several other finance houses now offer mortgages for up to 40 year terms, depending on the borrower’s circumstances. Longer terms obviously means smaller monthly repayments – although usually they mean greater amounts of interest have to be paid over the full duration of the loan.