Covering our some of clients’ top questions and the latest changes in the UK property <\/a>market, market trends, Section 21, letting fee bans, Generation Rent and buying a property through a limited company.<\/p>\n![\"Apple](\"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-content\/uploads\/sites\/2\/2019\/06\/buyassociation-apple-poduct-300x73.png\" "\\"\\"")
According to the\u00a0Moneyfacts\u00a0research,\u00a0the number of products with a 40-year\u00a0term\u00a0option increased by over 40% in June 2019, while\u00a0both 25 and 30-year term mortgages declined\u00a0over the same period.\u00a0Significantly,\u00a040-year term mortgages now represent 54.98% of the\u00a0mortgage\u00a0market, while\u00a030-year term mortgages\u00a0represent only\u00a03.31%\u00a0and\u00a025-year term represents just\u00a03.23%.<\/p>\n
There are now\u00a02,744, 40-year\u00a0term\u00a0mortgage products\u00a0available.\u00a0Borrowers seeking a 25-year mortgage have only 161 mortgage products available to them and the number of 30-\u00a0year\u00a0term\u00a0mortgage products has dropped\u00a0from 392 to 165.<\/p>\n
The increase in 40-year term mortgages could be attributed to the need\u00a0of\u00a0many\u00a0borrowers\u00a0for\u00a0smaller, more affordable, monthly repayments. However,\u00a0while longer-term mortgages reduce the monthly repayments over the course of the loan,\u00a0the accumulated increase\u00a0in interest\u00a0is considerably more. Borrowers should be aware that short term savings will cost them more in the long term.<\/p>\n
Moneyfacts finance expert Darren Cook says:\u00a0\u201cFor example, a \u00a3200,000 repayment mortgage at a rate of 2.50 per cent over 25 years equates to a monthly repayment of \u00a3897.23 and total interest payable would be \u00a369,169 over the term.<\/p>\n
\u201cHowever, the same mortgage taken over a 40-year term would reduce the monthly repayments to \u00a3659.56 but increase the total interest to be paid to \u00a3116,588, resulting in an additional \u00a347,419 in interest.\u201d<\/p>\n
While a 40-year term\u00a0will\u00a0make a mortgage more affordable right now,\u00a0borrowers should seriously consider the downsides. Not only will they be paying more in interest over the term of the mortgage,\u00a0but\u00a0they will also build equity in their property at a much slower rate, plus\u00a0they should also expect to pay a higher interest rate than they would on a\u00a0shorter-term\u00a0mortgage.<\/p>\n
However,\u00a0for\u00a0those that are\u00a0buying their forever home and have no plans to move again,\u00a0or\u00a0those that want to get on the housing ladder now and\u00a0may soon\u00a0be in a position to overpay their mortgage,\u00a0\u00a0a 40-year mortgage could be a good idea.\u00a0\u00a0Borrowers could take advantage of low monthly repayments now and remortgage as soon as they are able, to a better interest rate and a shorter mortgage term.<\/p>\n
This month\u2019s podcast will be covering everything you might need to know about property management and mortgages<\/a>. We will be joined by Matt Eastham from Easthams & Co \u2013 Property Management and Marcus Docker from Visionary Finance. They give us their insider\u2019s view on everything you need to know in the property management and mortgages<\/a> markets, hosted by our very own Katie Walker.<\/p>\n Covering our some of clients’ top questions and the latest changes in the UK property <\/a>market, market trends, Section 21, letting fee bans, Generation Rent and buying a property through a limited company.<\/p>\n