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Young Buyers Embrace 40-Year Mortgages

  • Writer: Sarah Ruivivar
    Sarah Ruivivar
  • Aug 4
  • 2 min read
Image: Unsplash
Image: Unsplash

There's a new trend sweeping the UK housing market – young buyers are increasingly opting for 40-year mortgages.


Why, you ask? Well, according to Moneyfactscompare, stretching that mortgage term can significantly lighten the financial load.


Imagine saving a nifty £255 each month on a £250,000 mortgage at a 5.05% rate, simply by choosing a 40-year term over the traditional 25 years. It's a potential lifeline for those feeling the pinch of high monthly payments. Plus, with the option to overpay when possible, borrowers can chip away at their mortgage term without the pressure of hefty monthly bills.


For instance, a regular £200 overpayment could shave nearly 13 years off a 40-year term and save over £123,000 in interest. Now that's some serious dough!


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As people work longer, it's no surprise that 85% of mortgages now offer the flexibility of a 40-year term. However, Moneyfacts warns that this could lead to being asset-rich but cash-poor in retirement. The key is to balance monthly savings with the long-term cost of interest.


With the Financial Conduct Authority noting that 68% of first-time buyers are opting for 30-year terms or more, affordability remains a hot topic. The Bank of England highlights that first-time buyers' deposits are around 60% of their household income, making these longer terms a practical choice.


As the demand for affordable housing grows, young buyers are hoping for a government push to hit the ambitious target of 300,000 new homes per year. So, whether you're a first-time buyer or a seasoned property professional, keep an eye on these evolving mortgage trends. Happy house hunting!


Want to hear more? Join Mal & Matt on the Property AI Report Podcast each week!

Access from your preferred podcast provider by clicking here



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