As a Guildford mortgage broker that specialises in an array of mortgages, it’s always interesting to see demand for specific products shift up or down depending on the current economic climate.
So, when we recently started to see a spike in enquires from people exploring long-term mortgages as a way in which to reduce monthly mortgage repayments, we weren’t surprised.
But what is a long term mortgage, what are the benefits of long term mortgages, and should you take one out?
Long term mortgages explained
If you take out a long term mortgage – 30 years, for example – then you’re effectively spreading out the cost of borrowing over a long-term period. This means that monthly payments are lower than they would be if, say, you took the loan out over half that time period. It does, however, mean that the overall loan will be more expensive owing to interest building up over a longer period of time.
With interest rates seemingly rising once a month (and at times even more frequently), people are becoming concerned that future mortgage deals might not … well, be deals. So, paying the loan back over a longer term is a way in which to make mortgages more affordable in the short-term.
But should you do it?
How long is a piece of string?
Unfortunately, there is no right or wrong answer. Whether or not you take out a long term mortgage depends on several factors, some of which include your appetite for risk, your financial situation and your retirement plans.
A 40 year mortgage is probably the longest term mortgage that we can access, for example. And this can be granted to take the applicant all the way up to 75-80 years of age. However, we would advise people to not agree to a mortgage term that would take them beyond the age they realistically intend to work to. Those that do are likely to feel the pressure – or simply won’t be able to keep up mortgage repayments – at the point at which they retire.
Long term mortgages can be good for those who would rather keep mortgage repayments, which is generally the largest living cost, low – even at the expense of increasing the overall cost of borrowing.
Given the level of commitment associated with this type of mortgage, we would highly recommend that you seek input from a mortgage broker if you are considering long term mortgages. A good mortgage broker will present the pros and cons of long term mortgages and help you choose a long term mortgage that’s right for you.
Coming to a decision on your own regarding this type of mortgage may come back to haunt you at a later date, so make sure you’ve explored every avenue before committing.
For advice, general guidance and the best UK long term mortgage rates, contact our team of Guildford mortgage advisers on 01483 238280 or e-mail info@complete-mortgages.co.uk.
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