One in five first-time buy­ers take out 35-year mort­gages

Daily Mail - - News - By Paul Thomas Money Mail Re­porter

ONE in five first-time home­buy­ers are now tak­ing out mort­gages that last up to 35 years.

‘Many peo­ple have no choice’

Soar­ing house prices are forc­ing young buy­ers to take ex­tra long loans, re­search shows.

Mort­gages typ­i­cally ran for 25 years, but over the past decade the pro­por­tion of first-time buy­ers tak­ing mort­gages last­ing 31 to 35 years has dou­bled from 11 per cent to 22 per cent.

Some fam­i­lies have even taken out loans for 0 years.

Ex­tend­ing a mort­gage brings down the monthly re­pay­ments but it can add tens of thou­sands of pounds in in­ter­est to the to­tal cost of the loan.

Last night, ex­perts warned young buy­ers of the risks of tak­ing out longer mort­gages.

David Holling­worth, of the bro­ker L&C Mort­gages, which com­piled the re­search, said: ‘Many peo­ple have no choice but to take out longer mort­gages with the way house prices have risen.

‘How­ever, it’s vi­tal they review their mort­gage reg­u­larly and over­pay where they can, oth­er­wise it will cost them thou­sands of pounds more.’

In the past ten years, the num­ber of new buy­ers tak­ing out 25-year mort­gages has fallen from 60 per cent to fewer than 0 per cent.

Stretch­ing a £150,000 mort­gage at 2.5 per cent in­ter­est from 25 to 35 years brings the re­pay­ments down from £673 a month to £536.

But it also adds £23,000 to the over­all cost be­cause they would re­pay £75,200 in in­ter­est – more than half the size of the orig­i­nal loan – rather than £52,000.

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