It is expected to become increasingly common for British property owners to be repaying mortgages well into their retirement as statistics now show that over half of all mortgage products can be taken out over a 40-year term. In fact, recent research carried out by Moneyfacts, a British financial information company, has shown this figure to rise from 36% as recently as five years ago. On the other hand, the traditional 25-year mortgage appears to be becoming a thing of the past with only 3% of mortgage deals requiring borrowers to repay within 25 years, an amount which has decreased from 7.5% in 2014.
It has been explained by Moneyfacts that mortgage durations are becoming longer as a result of the steep UK-wide increase in house prices. Additionally, homeowners are attracted to longer-term mortgage arrangements as it brings down monthly payments and allows them to afford higher loans. However, proprietors should be careful to remember that such extended mortgages spanning over decades will inevitably be more expensive in the long run due to higher levels of interest to be paid over the life of the loan. According to the Guardian, “opting to ‘go long’ on your mortgage could prove a costly decision” and therefore prospective home owners are being urged to think carefully about their options before taking up lenders on their lengthier mortgage deals.