With increasing house prices and a need to cut down on monthly outgoings, more and more home buyers are looking to longer term mortgages as a solution.
There has already been a dramatic increase in the amount of long term mortgages being taken out this year, with 40 year mortgages also being targeted by buyers. Between April and July this year, the number of people taking out long term mortgages rose by 8% compared to the same period in 2014.
Young and Old
For first-time buyers, it is relatively simple to take out longer-term plans. Some banks may not offer mortgages as lengthy as 40 years however, with HSBC offering a maximum of 30 years, and NatWest and Virgin offering 35 at most. Older mortgage borrowers may also struggle to take out loans of this length.
It is worth noting that long term mortgages will result in larger interest repayments. The Telegraph highlight this with the following example:
"Take a £200,000 repayment mortgage with a rate of 3% over 25 years. The monthly repayments would be £948 and the total interest payable over the life of the loan would be £84,526.
The same mortgage taken over 35 years would have lower monthly repayments of £770, but the overall interest would reach £123,274 – some £38,748 more".
The process of taking out 40 year mortgages is further explained on the Telegraph website.