{"id":10865,"date":"2018-01-31T12:00:12","date_gmt":"2018-01-31T12:00:12","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=10865"},"modified":"2023-10-06T09:11:32","modified_gmt":"2023-10-06T08:11:32","slug":"first-time-buyers-choosing-30-year-mortgages-reduce-monthly-costs","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-gb\/news\/first-time-buyers-choosing-30-year-mortgages-reduce-monthly-costs\/","title":{"rendered":"First-time buyers choosing 30-year mortgages to reduce monthly costs"},"content":{"rendered":"

In the past, 25-year mortgage terms were the norm, but new Government figures show that more than half of first-time buyers are taking out mortgages of 30 years or more.<\/strong><\/p>\n

Facing increased house prices<\/a> and more stringent affordability checks, the number of first-time buyers taking longer-term mortgages to reduce monthly repayment costs has increased by 40% according to the English Housing Survey.<\/p>\n

The change has come about quite quickly. Today, 42% of first-time buyers<\/a> have a mortgage term of 20-29 years, a drop of 6% since 2016 when over half chose a mortgage on the same terms.<\/p>\n

“The rise of longer mortgages is an unintended consequence of the FCA’s mortgage affordability rules, which ensure people could afford their monthly repayments if interest rates rise<\/a>. We are seeing a lot of movement towards 30-plus year mortgages,” said Daniel Hegarty, CEO of online mortgage firm Habito<\/a>.<\/p>\n

Adjusting the mortgage term?<\/h4>\n

Lower monthly mortgage commitments will help many first-time buyers get on the property ladder<\/a>, but they would be wise to consider overpaying while rates remain low. Paying a little extra each month would mean having a lower outstanding balance if rates rise in the future, and making higher repayments will knock years off a mortgage term and possibly save thousands in interest payments<\/a>.<\/p>\n

A first-time buyer taking a \u00a3300,000 mortgage over 30 years, on an average rate of 4.09%, could pay off their debt four years early and save \u00a335,260 in interest payments by overpaying their mortgage by \u00a3200 per month. If that is unrealistic, a minimal \u00a325 overpayment can still reduce a mortgage term by seven months and save \u00a35,737 in interest payments, according to the moneysavingexpert.com overpayment calculator.<\/p>\n

While longer-term mortgages are becoming the norm, first-time buyers would be well advised to factor in their mortgage overpayment facility and use it to their advantage, saving money<\/a> and being mortgage-free earlier than expected.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the past, 25-year mortgage terms were the norm, but new Government figures show that more than half of first-time buyers are taking out mortgages of 30 years or more. Facing increased house prices and more stringent affordability checks, the number of first-time buyers taking longer-term mortgages to reduce monthly repayment costs has increased by… Read more »<\/a><\/p>\n","protected":false},"author":3380,"featured_media":10872,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4,26],"tags":[84,25,341],"class_list":["post-10865","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","category-tax-mortgages-money","tag-first-time-buyer","tag-mortgages","tag-newsletter"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/10865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/3380"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=10865"}],"version-history":[{"count":1,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/10865\/revisions"}],"predecessor-version":[{"id":6097095,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/10865\/revisions\/6097095"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/10872"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=10865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=10865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=10865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}