Long term mortgage could mean tens of thousands in extra interest

With interest rates rising three times in the space of six months and house prices in the UK rocketing to extortionate levels over recent years, the prospect of being able to purchase a property for the average first time buyer is becoming slimmer and slimmer. Firstly the buyer has to borrow a huge amount of cash to cover the rising cost of purchasing a property in the UK, which means that they have to burden themselves with a an extremely large loan – assuming that they can get a loan for the amount that they need based on their income.

And with interest rates on the up, even if they do manage to get the loan for the amount that they need, the interest that they have to pay on their repayments is three quarters of a percent higher than just six months ago, with some experts predicting that another rise is on the cards in the first quarter of the year. And without the equity from a previous property to help them out, things certainly look bleak for first time buyers in the UK at the moment.

However, in order to make the dream of property purchasing a reality for more first time buyers, many lenders have changed their criteria when it comes to mortgages. Abbey, for example, is offers five times the amount that the borrower earns by way of a loan and offers repayment terms of up to fifty seven years, compared to the traditional twenty five year mortgage. However, is it really worth if for the borrower? In addition to lumbering themselves with debt from the time that they hit their twenties to the time that they retire, the borrower could end up paying tens of thousands of pounds extra in interest over the term of the extended mortgage.

One official from Moneyfacts stated: 'By spreading the mortgage over a longer period, monthly repayments can be at more affordable levels. However, it's a frightening thought that you could potentially be forking out that hefty monthly mortgage payment from the moment you turn 18 until the day you retire, or beyond. The key to becoming mortgage-free is to take control of your mortgage, overpay whenever you can and make sure you review your mortgage deal on a regular basis.'