Long-life loans are popular in Japan and other countries across the world, but the traditional term for a mortgage in the UK is 25 years. However, this looks like it could be changing if a recent report from the Council of Mortgage Lenders (CML) is anything to go by.

I came across the figures on Thisismoney.co.uk, which stated that many first-time buyers are now choosing these ‘long-life’ loans which can be terms of up to 40 years. These types of loans have risen by nearly 35% since 2010, and in the last quarter around 22,000 of the 80,000 new home owners have opted for lengthier deals.

So what are the benefits of these extended-term mortgages? The main selling point for many would-be buyers is that they cut their borrowers’ monthly outgoings drastically, meaning they have more disposable income for bills and other living costs. These deals also help new homeowners beat the more challenging affordability tests that have been imposed by lenders recently.

However, for every up, there must be a down. The disadvantage is that the longer a mortgage lasts, the more monthly payments need to be made and the higher the total repayments are. For example, with a 4.8% interest rate, the total cost of a £110,000 40-year mortgage would be a staggering £207,000.

An HSBC survey shows that the average age of a first-time buyer is now 35 years, as young people now need more time to save up a hefty deposit. As a result, a long-life loan will push their repayments well into their retirement age. And who wants to be paying off debts when they should be relaxing?

Have you considered the pros and cons of an extended mortgage term?

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