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Are 35 year mortgages a bad idea?

Bank of England expresses concerns about borrowing into retirement

Mortgage terms are getting longer, with the Bank of England warning buyers may be borrowing well into retirement. But as a future home owner, are longer deals a money trap or just a sign of the times?

According to figures from the Bank of England, one in seven home buyers (15.75%) are signing up for mortgages of 35 years or longer – a notable increase on 2005, when just 2.7% of buyers took terms this long.

It’s possible 35 year plus mortgages reflect the fact the Brits are living longer. But a UCL study released this week shows life expectancy improvements have levelled off since 2010 – and the Bank of England (BoE) has argued lenders are storing ‘problems for the future’ by approving long-term deals.

Which? explains the costs of longer term mortgages – and how you can decide what’s right for you.

  • If you’re buying your first home, you can get impartial, expert advice on finding the right mortgage by calling Which? Mortgage Advisers on 0808 252 7987.

How common are long-term mortgage deals?

Mortgages lasting 35 years or more have been available for a long time, but their share of the market has increased significantly in the last decade.

The biggest step change is the increase of 30-35 year mortgages, which are up from 7% in 2005 to nearly 20% in the last quarter. By contrast, traditional 25-30 year mortgages have dropped, from 38% of approvals in 2005 to just 24% today.

At the same time, lenders seem reluctant to offer terms above 35 years, with 36-year or longer mortgages remaining a small percentage of the market.

The chart below shows that while mortgages of 31 years or more have soared since 2005, those lasting for 36 years or more have consistently made up only 2-3% of overall approvals.

How expensive are 35 year mortgages?

As a savvy home buyer, you’ll almost certainly want to switch your mortgage before it reverts to your lenders standard variable rate, meaning you’re highly unlikely to stay on the same deal for three decades.

But to explore the potential cost of a 35 year mortgage, here’s how much more it’d cost you if you stuck out the full term.

The example below is based on a £250,000 mortgage with no product fees. We’ve calculated the overall interest (APRC) at 4.5% for this example.

Term Monthly repayment Total repayment Cost of debt
25 years £1,405 £421,494 £171,494
30 years £1,279 £460,437 £210,437
35 years £1,193 £501,116 £251,116

As you can see, while taking a longer mortgage can make your monthly payments significantly cheaper, you’re paying around £40,000 more in total for every five years you add to your term.

Should I get a longer term mortgage?

While taking out a longer term mortgage might be the only way you can afford to get on to the property ladder right now, it’s worth considering whether this is the best option for you.

David Blake of Which? Mortgage Advisers says deciding the length of your mortgage term is a case of ‘balancing speed of repayment with affordability of repayment.’

‘It’s important to think about how you want your money to work for you and realistically, what age you want to take your mortgage up to.’

‘Some people go for lower monthly repayments with a view to working longer, while others want to maximise their repayments and pay their mortgage off faster.’

‘There are also other things to consider such as offsetting and making over-payments which can considerably reduce the cost of your mortgage.’


Our top tips:

  1. If you’re signing up for a fixed-rate mortgage, make sure you switch before it reverts to your lender’s standard variable rate
  2. Get a mortgage where there are no penalties for making overpayments
  3. If feasible, consider whether saving for a bigger deposit and getting a mortgage a few years later could be the better option

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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