35 Year Lending

A 35 year repayment term is fast becoming the norm for a first time buyer taking out a mortgage according to the FT.  This comes after reports that there were more than 300,000 first time buyers last year.  This is the second year on the spin where the 300,000 mark has been passed.

If you are taking a 35 year mortgage then your monthly payment will be lower compared to if you took a 25 year mortgage. This sounds good and more affordable but in reality you are paying interest for an extra ten years.  This means the total amount you would pay back on a 35 year mortgage is far greater and in the long run could expose you to more market conditions as you’ll need a mortgage for longer.  These market conditions may be rate rises, change of lending criteria or availability of mortgages.  Often as a first time buyer the difference between a 25 year mortgage payment and that of a 35 year one looks quite daunting but my advice would be to break it down per week.  Also, if you happen to be spending a certain amount on rent I would try and keep to this when considering your mortgage payment rather than taking something that costs you less.  You’ll be mortgage free sooner this way.


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