Applying for a home loan is a major life decision because this can open the door to better living conditions. It’s important that you think about the type of mortgage to take and whether repayments won’t disrupt your financial stability in the future.
In the United Kingdom, the average mortgage duration is 25 years (although you may easily get one that is longer), and some lenders will even allow you to extend your mortgage during the period.
You’ll learn about the longest mortgage terms possible, the implications of taking a longer mortgage, how to extend your mortgage, and more in the following guide to maximum mortgage terms.
Explaining Maximum Mortgage Term
The greatest term length for a residential mortgage is 40 years. However, a few specialty mortgage lenders are known to offer retirement interest-only (RIO) mortgages with even longer terms.
The average mortgage term in the UK is 25 years, and while some lenders will refuse to offer a term longer than that, others will consider term lengths of up to 35 years. There are fewer lenders who will consider term lengths of up to 40 years.
Exploring Long-Term Mortgages
Consumers opt for a mortgage with a term longer than 25 years to reduce their monthly payments. The amount due each month is less if the cost is spread out over a longer period.
This can be beneficial to anyone who wishes to reduce their outgoings to save money or free up funds for other financial obligations. A 30-year mortgage term or longer may be feasible in some circumstances, as long as you don’t mind living in your current home or having a mortgage to pay for several decades or more.
The biggest disadvantage of a longer mortgage term is that it usually costs more over time. This is because you will have to make interest and capital payments throughout the duration of the term. Despite the lower monthly mortgage payments, an extra 5-15 years of these is likely to mount up.
Getting a Long-Term Mortgage
Your mortgage lender will discuss term length with you during the application process and give you the option of requesting a loan agreement that is greater than 25 years. However, there’s no guarantee that your preferred lender will provide longer terms, so this can be risky.
If you require a mortgage agreement with a term of more than 25 years, you should consult a mortgage broker. They have access to the entire market and will be able to tell you which lenders provide 35-year, 40-year, and longer mortgages for retirees.
Working with a Mortgage Broker
A mortgage broker will assist you in obtaining a longer-term mortgage by searching the entire market for all deals with terms longer than 25 years—matching your needs, age, and personal circumstances to a longer-term mortgage deal and ensuring that you are introduced to the most suitable lender the first time.
They walk you through the full ramifications of a longer-term mortgage as well as viable alternatives. They also negotiate on your behalf with the lender to ensure you obtain the best prices.
Determining How Age Affects Your Mortgage Term
The qualifying conditions for a longer-term mortgage are similar to those for a standard-term mortgage, but certain mortgage lenders will look at your age more closely if you want a loan that lasts longer than 25 years.
This is because the mortgage company will take into account the fact that the loan will last until you retire. Because most people’s income diminishes as they age, your lender will need to be convinced that you can make your mortgage payments in retirement.
Conclusion
A few lenders will not provide you a mortgage if the term extends beyond your 70th birthday, and the majority of them stop at 75. For persons who can’t qualify for a longer-term mortgage due to their age, there are a variety of retirement mortgage choices to explore, such as RIO mortgages.
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.
If you’re looking for the best mortgage brokers in Chester to help with your home loan, A Move Brokers is the firm for you. We offer a wide range of mortgage products and can help get the best deal to suit your individual needs. Contact us today to schedule a consultation!