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30 Year Mortgages


30 Year Mortgages

New published figures show an increase in 30 year mortgages. We take a closer look at them and the latest figures around their growth. We also consider why they are popular and discuss what’s good – and bad – about 30 year mortgages. Find out more…

30 year mortgages growing in popularity

Thanks to recent data from Bowmore Financial Planning, we can see that 30 year mortgages have increased 13% in the year to end September from 459,495 in 2021/22, to 520,779 in 2022/23. And it’s not just the 30 year mortgages which are gaining traction. You can also see from figures shared by the Financial Conduct Authority, that the number of 40 year mortgages are also on the up. These have increased a significant 29% from 1,533 in 2021/22 to 1,980 in 2022/23. It’s clear to see that more and more people are turning to mortgages with a longer term.

Why are these longer term mortgages being chosen?

There could be a few reasons. One of them is very much down to the increased interest rates over the last year. Many homebuyers have been deterred by the interest rate rises. But there is another option for them. By stretching a mortgage out over a longer term, homebuyers can reduce monthly mortgage payments and make them a little more affordable.

Another reason is to help buyers afford a larger property, one which would otherwise be outside of their budget. In fact, we recently shared data from Dataloft, the HMRC and Land Registry on our social media channels with regards the changing demand for detached homes. The information showed that 12 months ago, semi-detached houses accounted for 28% of sales, and detached houses 22%. However, by the end of the year, the proportion of detached house sales had increased by 3.7%. While the increase in semi-detached houses was lower at 3%.

Could it be that buyers are skipping ‘mid-level’ properties like terraced and semi-detached properties, and jumping straight to the largest? And to help them do so, they are using longer term mortgages…?

Important things to know about 30 year mortgages

The key number one point to remember when it comes to mortgages lasting longer than 25 years is that you will pay more for the mortgage in the long term. So, if you take out a mortga

The downside to longer term mortgages

Yes, the reduced monthly mortgage payments are desirable with them being spread over a longer amount of time. However, there are downsides to longer term mortgages.
We’ve just mentioned the higher interest rates for such mortgages which come about due to the greater level of risk. Well, one of the first downsides to a long-term mortgage is the fact you will spend much more on interest over the lifetime of the loan.

Secondly, you will be looking at a much longer period in your lifetime for making monthly mortgage payments. With longer term mortgages, the loan balance will remain higher for longer. How will this fit in with your age, employment, family circumstances?
And finally, it takes much longer to build equity in the property. This is important to bear in mind if you were hoping to use some of the equity further down the line for renovations or extensions.

What to do if you are considering a 30 year mortgage

We highly recommend you discuss your options with an independent financial advisor. They will consider your circumstances now and what your future may look like from a financial perspective. It’s very important you don’t rush into applying for a 30 year mortgage, or one over an even longer term. You need to weigh up all your options and have some understanding of the long term costs. When it comes to deciding on a longer term mortgage, remaining pragmatic and covering all angles, is vital.

If you are considering a 30 year mortgage or one for longer and require financial advice, then we recommend having a conversation with Nick Bone. Nick is a Mortgage Advisor at Nicholas Bone Financial.

Or perhaps you are looking to sell your home this year, to enable you to upsize or downsize, depending on your circumstances. As a local, reputable, independent estate agent, we can help with a realistic property valuation before selling your home quickly and at the best price possible. Give us a call on 0161 941 4445 or send us a message here.