The number of people taking out 30-year and 35-year mortgages in Bristol, and the whole of the UK, is rapidly rising. There are a growing number of first-time buyers opting for this type of deal, compared to the traditional mortgage term of 20 or 25 years. This may be attractive when you are seeking a better mortgage deal for a property in the hard-to-afford city of Bristol, but are you prepared to be saddled with a mortgage until you’re 60 or even 70? We looked at the modern phenomenon of extra-long mortgages, and how it affects you.
Sharp Rise in Long-Term Mortgages
Recently the Halifax reported that in the year 2016 around 28 percent of first time home buyers chose a mortgage with a 30- to 35-year term. This is a big increase on the numbers in 2006, which show that only 11 percent of buyers opted for this type of mortgage.
The Halifax also points out that the average price for a property that first time buyers are paying is £200,000 in Bristol and the rest of the UK, excluding London. With these high prices, plus a rise in the amount of debt households have, many people are choosing to buy a house later than they would previously have opted for. They are also opting for a longer payment term.
What are the Benefits of a 35-Year Mortgage?
The main benefit to this type of mortgage, according to a financial advisor bristol expert, is that it lowers the monthly repayments on a mortgage. This can be an attractive opportunity that people who suffer from a tight budget will eagerly look for. So, the longer the mortgage term, the less you pay each month. This helps when you are trying to finance a house as well as pay for the costs of raising a family, running a car, and other expenses.
Previously, lenders in Bristol would only offer a mortgage that lasted until a person’s normal retirement age. But now lenders are giving terms that go into retirement.
What are the Disadvantages of a 35-Year Mortgage?
Of course, with a longer mortgage you can naturally expect to take longer to pay off the mortgage. Which means you pay more interest, making it more expensive over the long term. While this may not be your prime consideration when you take out the mortgage, it could make a big difference when you want to save money later on or you need extra cash for other projects.
And the main thing to consider if you are getting a 30-year or 35-year mortgage that lasts into retirement is whether you can afford to pay the mortgage when you are retired and have no income from employment coming in.