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How to choose the right mortgage term

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A mortgage is a long-term commitment, but just how long will depend on what term you choose for your mortgage.

A mortgage term is the length of time that you will be indebted to your mortgage lender – at the end of the term your mortgage will need to be paid for in full (a repayment mortgage is designed to make sure that the debt is paid back by this point).

How long is a typical mortgage term?

In the UK, the average mortgage term is 25 years. Traditionally, most homeowners took out 25 year mortgages because this was the maximum term that financial advisers could earn commission on, but this is no longer the case, so it is certainly possible to choose a term based on your individual preference.

These days, mainly down to the issue of affordability, longer term mortgages are becoming increasingly popular, with more and more people paying back their home loan over a period of 30, or even 35 years.  Some lenders may allow an even longer mortgage term (usually a maximum of 40 years), but this would likely depend on the age of the applicants.

Is it better to get a shorter or longer term mortgage?

The length of term which you choose will depend on your individual circumstances with affordability likely to be the biggest factor.

Whilst a longer term mortgage will likely offer you lower monthly repayments, the downside of this is that the longer you take to pay off your mortgage, the more interest that you will need to pay back to the lender, increasing the overall cost of your loan.

If you can afford to do so, a shorter mortgage term would cut down the amount of interest due overall and would mean that you are mortgage-free much earlier than the average homeowner.  The cost of this is reflected in the higher repayments that you’ll be paying during the earlier part of the term, due to the interest payments being front-loaded.

Can I change my mortgage term at a later date?

If you’re in a good position with your finances, and you’re on a low interest rate then you may be considering reducing the term in order to cut down on the interest payments and pay your mortgage off sooner.  Whilst this is possible, you’ll need to make sure that you can afford the repayments for the duration of the term.  Another option would be to check with your lender whether overpayments are at all possible (without incurring any penalties).  Overpaying your mortgage typically has the same effect as reducing the term, without the same commitment. With this option, if affordability becomes an issue, you can easily stop the overpayments and return to the original amount.

Extending your mortgage term is less common, however it is still possible.  Some people may choose to extend their mortgage in order to fund home improvements, or simply to benefit from lower repayments each month.  Interest rates on mortgages are often significantly cheaper than personal loans; however by adding the additional time onto your mortgage, you will pay much more in the long run.

SoSmart Money are specialists when it comes to mortgages and insurance. We can put you in touch with a trained expert, who has access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable lender and product for your needs.

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The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.


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