Is a longer mortgage term the answer?

6th June 2024 Posted in: Housing Market, Interest Rates, Mortgages, News

Over half of mortgage borrowers took out a mortgage with a term of 30 years or longer in 2023. This is up from 41% in 2021. There has also been a surge in mortgages going beyond state retirement age. This is no huge surprise! With rates much higher than they were and affordability stretched for many, it may be the only way to bring payments down to an affordable level, particularly for those who are already in the property and need to remortgage. 3 in 5 homeowners also expect to fund their retirement through property.

Sir Steve Webb, former pensions minister said, “The challenge of getting on the housing ladder is forcing large numbers of young home buyers to gamble with their retirement prospects by taking on ultra-long mortgages”, and he’s concerned that using limited retirement savings to clear a mortgage could leave people at greater risk of poverty into old age.

There’s not necessarily anything wrong with taking a longer mortgage term if this is the most affordable solution for you. However, we would always suggest speaking to a qualified adviser about your options, to make sure you fully understand the consequences, and that a longer-term means paying more interest overall.

• There may be other schemes available to you to enable you to meet affordability over a shorter term, without stretching you too far.
• Overpayment facilities and early repayment charges of the product being recommended will be discussed and made clear to you.
• We will source the whole of market for an affordable solution- we know how each lender would assess income and outgoings, and their affordability calculations.
• There are lenders who will allow standard mortgages past both state retirement age and your intended retirement age. We always discuss how you would continue to make the payments into retirement and check this is feasible.
• Interest Only may be an option for you to keep monthly payments down, providing you have a suitable repayment vehicle.
• We have advisers qualified in Equity Release, who can assess all relevant options if you are over 55.
• We will contact you 6 months before the initial rate period ends and will carry out regular reviews to assess your circumstances. You may be able to refinance in the future and reduce the term again.

If you are looking to purchase or remortgage and would like us to look for an affordable option for you, please get in touch on 01702 53800 or email enquiries@ingard.co.uk

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.