Extended Mortgage Terms Means Huge Amounts of Interest For Consumers
November 12, 2006 by admin
Filed under News, News-Mortgages
The rising property prices in the UK over the years have resulted in many people losing out on the chance to get their foot on the property ladder.
And because of this, over recent years, many banks and building societies have started to offer longer mortgage repayment terms over and above the traditional twenty-five year mortgage, as well as offering higher salary multiples, in a bid to attract consumers that are desperate to get onto the property ladder. Over recent years many lenders have been offering thirty and thirty-five year mortgage repayment terms.
However, experts are now concerned because some lenders have started offering even longer repayment terms, with up to fifty-seven years now being offered as a mortgage repayment term option with some mortgage providers. These mortgages have been labelled as ‘madness’ by experts, who state that although the monthly repayments will be lower for consumers because of the extended term, rising interest rates and the amount of time for which the borrower will be in debt could prove a real problem.
One director of a mortgage broker stated: “Life-long mortgages are a false economy. You end up paying literally tens of thousands of pounds in extra interest. It really is not a sensible thing to do. The idea of paying off a mortgage for 40, 50 or even 57 years is madness.”
With average house prices in the UK rising to well over two hundred thousand pounds, and with interest rates rising to five percent, a number of lenders have made changes to the mortgages that they offer in terms of the length of the mortgages available and the amount that can be borrowed. This is to attract more custom from those that would otherwise be unable to purchase a property.
Tags: years, length, Mortgages, terms, costs, increase, owe, extend, charges, debt
