Think carefully before taking on long term mortgage

Mortgage experts have highlighted the problems associated with longer term mortgages, urging consumers to think twice before committing to a mortgage that could over a term that is over twice as long as the traditional 25 year mortgage.

The rocketing property prices in the UK have meant that those looking to purchase property have had to raise huge sums of cash in order to afford a property, and for many this has meant that the monthly repayment are extortionate. The banks' answer to this problem has been to offer mortgages over a far longer term to keep monthly repayments down.

The second largest mortgage lender in Britain, Abbey, is now offering mortgages over a whopping 57 year term, which can help to keep monthly repayments down for consumers. Eight out of ten other mortgage lenders are also offering mortgage terms over and above the traditional 25 year mortgages in an attempt to attract potential property purchasers who could otherwise find themselves out in the cold when it comes to getting onto the property ladder.

However, experts have stated that although a longer term mortgage can help to keep down repayments on a monthly basis consumer could be horrified by the amount of extra interest that they could be paying for the privilege of a longer loan term – not to mention the worry of getting themselves in debt from a young age until they hit pension age in many cases.

One mortgage analyst from Moneyfacts stated: 'By spreading the mortgage over a longer period, monthly repayments can be at more affordable levels. However, it's a frightening thought that you could potentially be forking out that hefty monthly mortgage payment from the moment you turn 18 until the day you retire, or beyond. The key to becoming mortgage-free is to take control of your mortgage, overpay whenever you can and make sure you review your mortgage deal on a regular basis.'

Tom Smith
5th March 2007

 

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