The government is consulting on allowing mortgage terms of up to 50 years. This is common in several countries around the world and the UK is considering allowing them to:
The average mortgage rate between 1997 and 2022 was 5.67% pa but in 1998 it was 8.87% pa but when you look back to 1989-1991 the average was 15% pa+ and in 1979 it was 17% pa.
Comparing 25 and 50-Year Mortgages
We decided to use an average mortgage rate of 6% pa over a 25-year mortgage term and 50-year term when borrowing £200,000.
|
25 Year Mortgage |
50 Year Mortgage |
Conclusion on 50 Year Mortgage |
Initial Monthly Payment |
£1,288.60pm |
£1,052.81pm |
Cheaper initially and meaning on a 50 year deal you could borrow £245,000 for the same £1,288pm payment i.e., afford a property costing an extra £45,000 more. |
Total Interest Paid Over Term |
£186,580.84 |
£431,685.75 |
A staggering £245,104.91 more interest is paid, meaning you have paid more than double interest. |
Conclusion on 50-Year Mortgage
Cheaper initially and meaning on a 50 year deal you could borrow £245,000 for the same £1,288pm payment i.e., afford a property costing an extra £45,000 more. A staggering £245,104.91 more interest is paid, meaning you have paid more than double interest. We suggest if you do go for a 50-year mortgage to:
Cynic’s View
The move to allowing 50-year mortgages will likely mean: