It looks like the 25 year mortgage is over!
There is no “set” term for a mortgage. In theory it can be any length, the longer a mortgage… well the longer you pay it back for. But usually a longer mortgage means cheaper monthly payments, and more interest for the lender! Generally though mortgages have been 25 years. That is the “standard” I suppose.
But recently there has been research about the different length of mortgages that have been taken on and it looks like the “standard” of 25 years, is declining. At the moment the “standard” only contributes to 2.97%. Which is hardly anything really. Then looking at the nearest as the 30 year and the 35 year mortgage, they make up around 45% of mortgages in 2019. With 40 year mortgage making up the rest, which is over 50%. Source (you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)
This is a huge shift in ideals, what products are on offer and shows the change in the market. And not only that but you can get mortgages when you are older now.
A part of this is the slow down in the market overall. Lenders need to lend so they have to make their products available to as many people as possible. It needs to be accessible, so allowing longer mortgages, with potentially less payments is a good start. Allowing older people to take on these longer mortgages, also opens up that market to people to get mortgages.
What are the potential downsides to a longer mortgage then. Well the issue is to do with retirement. If you say get a mortgage at 35 years old at 40 years. That means that you will not have paid off your mortgage until you are 75 years old. If all goes to plan in your life, you probably want to retire at 65. So you have an additional 10 years of mortgage payments. Can you and your pension afford that? That is the risk, and its hard to think about that at 35. You want a house, this is an option you can afford. But truly think of where you will be at 65. Can you afford those payments then.
With the market constantly changing, and what is the norm 30 years ago, is not the same as it is now. Make sure you understand what sort of mortgage you get, what ramifications there are for you. And think for the future.
Always speak to someone you trust. And someone who understands the market now!
Your home may be repossessed if you do not keep up repayments on your mortgage.