Times have certainly changed as statistics now show that record breaking mortgages are being taken out by Britain’s first time buyers in their attempts to own their first home.
Traditionally, first time buyers have always borrowed for 25 years but because of ‘sky high’ housing prices they are now being forced to borrow over a much longer period and this means that many will be paying their mortgage after long into their retirement.
How Mortgages Have Changed in Time!
Mortgage lenders are now accepting applications over a 40 year period and we have noticed that the majority of first time buyers we deal with are applying for mortgages between 35-40 years.
More worrying for first time buyers is the fact that house prices continue to rise. Nationwide have recently announced that house prices have risen consecutively for 13 months, which is a record since the slump in 2007.
Some Lenders Offer First Time Buyers 40 Year Mortgages
First time buyers should be aware that although the monthly repayments are lower the cost of their mortgage is a-lot higher when you add the interest. As an example; a first time buyer 25 year mortgage of £100,000 with an interest rate 4% would cost just over £58,000 but a 35 year deal would cost another £27,000. The 35 year mortgage works out to be approximately £80 per month lower than the mortgage over 25 years.
The rising house prices are certainly putting pressure on first time buyers and making it more difficult, and much more expensive for them to take their first steps onto the property ladder.
To help first time buyers purchase their first home they used to be able to take out an interest only mortgage, which were favorable due to their lower repayments, but these type of mortgages are no longer available.
If you are a first time buyer looking for a mortgage it’s also worth noting that some mortgage lenders have age restrictions in place and require the loan to be paid in by the time you reach either 70 or 75.
As Mortgage Advisers We Deal With Many First Time Buyers
We are Mortgage Advisers located in Shrewsbury but have clients throughout Shropshire. If you are a first time buyer and considering buying your first home but unsure where to go please contact us for a free consultation on 01743 364377 or send us an email.