What Is A Mortgage Term?

A mortgage term is the length of time, usually in years, in which the parameters of a mortgage have legal effect. Once the term has expired, the remainder of the mortgage balance will need to be renewed, refinanced or paid in full.

In the UK, 25 years is usually the maximum length of a term. There are now many lenders who offer mortgages longer than 25 years, with the longest readily available being 40 years. The mortgage (or loan) is ‘secured’ against the value of your home until it is paid off and if you can’t keep up your repayments then the lender can repossess your home and sell it so they get their money back.

For example, if you took out a 25 year mortgage in 2015 and made all of the repayments, it would be paid off in full by 2040.

Longer term mortgages

  • usually have cheaper monthly payments because they are spread out over a longer term.
  • rate rises have less of an effect
  • they are more expensive overall
  • can take longer to pay off

Short term mortgages

  • usually cheaper overall and quicker to pay off the mortgage
  • usually have higher monthly payments
  • rate rises can have more of an effect

The length of your mortgage term really depends on your financial circumstances. What is best for you might be very different for someone else. You will also need to consider a repayment mortgage vs interest only. The best mortgage term is one that gives you affordable monthly repayments, but doesn’t have you paying more in interest than necessary.

Can older borrowers get long term mortgages?

Some lenders will only offer mortgages to people who can pay this off before they retire. This usually results in older borrowers only being able to get short term mortgages with certain lenders.

If you are interested to find out more about the best mortgage term for you then please get in touch.

*Please note: Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

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