Is a 35-year mortgage right for me?

When picking the mortgage product that is right for you, it’s not just those monthly repayments and initial house deposits that make for essential reading.

While the most popular mortgage term for first-time buyers is 25 years according to recent research, 30- and 35-year mortgages are becoming increasingly common. With longer mortgage terms, homeowners pay less per month to ensure buying a property is as affordable as it can be, even as the base rate rises and the cost of living crisis intensifies.

In this blog post, we explore how your mortgage term affects what you pay in both the long and short term, and why a 35-year mortgage may not be all that.

Why borrow for longer?

The benefits that go hand-in-hand with 35-year mortgages shouldn’t be underestimated. Longer mortgage terms have provided a lifeline to those looking to buy for the very first time, with the smaller monthly repayments making that move onto the property ladder more manageable.

At first glance, you could make savings of up to £175 per month when taking out a £200,000 mortgage at a rate of 4% over 35 years instead of 25 years. These monthly payments add up, however.

How much more will you pay?

While the savings that can be realised from month-to-month will make those bills more manageable in the short term, it’s a very different story when comparing 25-year and 35-year mortgages for the long term.

The total interest paid over the longer term will be significantly higher with a 35-year mortgage – £55,000 higher to be exact (again with a £200,000 mortgage at a rate of 4%)! The capital repaid after 5 years is also much, much lower when comparing a 25-year mortgage with a mortgage term that ends 10 years later.

With a 25-year £200,000 mortgage at an interest rate of 4%, you’ll pay £26,000 capital off your property after five years. With a longer-term, 35-year mortgage, you’ll pay just £14,500 off your home during the same period.

When does a long-term mortgage make sense?

There are some instances where taking out a longer, 35- to 40-year mortgage makes sense. We’ll let What Mortgage reveal all:

“…the 35/40-year mortgage might be the perfect product for those at the early stage of their career, when possible windfalls, predictable bonuses or probable pay rises promise to appear over the next five to ten years. These can then be used to overpay the mortgage and thereby shorten the term over time. It might also suit those who have found their ‘Forever Home’ – and have no foreseeable plans to move.”

Which mortgage term is right for me?

If, in the short term, you can stretch your budget to afford the monthly mortgage repayments on a 25-year product, we’d certainly recommend doing just that. While a longer-term mortgage looks great on paper from month to month, the interest you’ll pay will be tens of thousands of pounds more on a 35-year mortgage than it would be on a 25-year mortgage.

If you do want to opt for a long-term mortgage, take a closer look at the overpayment terms associated with your selected product. Making regular overpayments can reduce your term dramatically, meaning you’ll pay more capital and less interest.

Need further advice on mortgage terms? Our experts are here to help. Contact us today to find your local mortgage advisor.