More than half (54.98%) of all residential mortgage products currently available have a standard maximum mortgage term of up to 40 years.
Mortgage terms of 40 years or more are becoming more popular, Moneyfacts has found.
More than half (54.98%) of all residential mortgage products currently available have a standard maximum mortgage term of up to 40 years, up from 50.89% in March 2019 and 41.54% five years ago.
Darren Cook, finance expert atMoneyfacts.co.uk, said: “In the past, a standard term of a mortgage generally amounted to a period of 25 years, but most products are now available for a period of 40 years.
“By extending their mortgage term, borrowers can reduce their monthly repayments and therefore are more likely to meet strict affordability requirements.”
Since March of this year, the number of mortgage products that allow a borrower to extend their mortgage term up to 40 years has increased by 140 products, from 2,604 to 2,744 products, constituting nearly 55% of all products available to a maximum of 25, 30, 35 and 40-year terms.
Cook added: “A reduction in the number of products available up to a maximum term of 35 years may show that there has been a slight shift in products having an additional five years in the available term.
“A longer mortgage term may reduce the monthly repayments of a mortgage, however, the additional interest that accumulates over an extended mortgage term could be considerable.
“For example, a £200,000 repayment mortgage at a rate of 2.50% over 25 years equates to a monthly repayment of £897.23 and total interest payable would be £69,169 over the term.
“However, the same mortgage taken over a 40-year term would reduce the monthly repayments to £659.56 but increase the total interest to be paid to £116,588, resulting in an additional £47,419 in interest.”
