Young homeowners with longer mortgages
Mortgage terms of 40 years have become increasingly common, meaning some homeowners will still be making repayments into retirement.
A recent survey shows that two-thirds (66%) of borrowers aged 30 or under have mortgage terms between 30 and 40 years. This is compared to 42% of homeowners in their 30s who have longer mortgage terms, and significantly more than those in their 40s (6%). Despite having longer terms, the average mortgage rate for under 30s is 4.50%, which is higher than those in their 40s (3.89%).
While longer mortgage terms may help some people to get on the property ladder, the research estimates that over 3 million Brits will still be repaying their mortgage at retirement age. Among those surveyed, 19% of these people are concerned about how they will be able to keep up repayments when they have retired, and 58% do not have a plan for how they will repay the outstanding debt.
While mortgage terms of 30 or 40 years can reduce monthly repayments and make borrowing more affordable, it also means paying interest over a much longer period and potentially carrying mortgage debt well into later life.
We can help source a mortgage that works for you and your finances – get in touch for advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Sources:
https://moneyage.co.uk/Younger-homeowners-opt-for-longer-term-mortgages-to-combat-higher-rates.php
https://sprive.com/blog/40-year-mortgages-should-lenders-be-doing-more-1
Photo by Vitaly Gariev on Unsplash.
