More 1st Time Buyers Taking on 30 Year Mortgages
2 minute read
First time buyers are increasingly accepting mortgages with extremely long terms according to new statistics released by the Council of Mortgage Lenders. With house prices on the rise, more and more renters desperate to get onto the housing ladder are taking on mortgages which they will be repaying for the next 30 years.
1 in 5 Q2 2014 mortgages lasts 30+ years
Arranging suitable bad credit mortgages may not be a walk in the park, but finding a feasible mortgage full stop now appears to be challenging for many non-home owners who dream of a place to call their own.
Of the 171,000 mortgages taken out in Q2 2014, 1 in 5 had a payment term of 30 years or more. Amongst first time buyers, this figure was even higher. 28% of first time mortgages had payment terms spanning more than three decades.
This situation leaves many young buyers looking at a lifetime of mortgage repayment and an extremely high level of interest to pay for.
Back in the day
30+ years of mortgage repayment is a very long time by previous standards. Traditionally mortgages would run for around 25 years meaning that young people could buy a home and own it by the time they were approaching retirement.
Just a decade ago, only 4.5% of borrowers would be working with repayment terms of three decades or more compared to the 20% who have accepted these terms over the past few months.
Why the long mortgage
So what factors lie behind this 15.5% increase in very long term mortgages? With house prices rising and lenders still incredibly cautious post-credit crunch, accepting these kinds of terms is one of the only ways young mortgage-seekers can get a foot on the property ladder without a huge deposit. Stringent checks on borrowers’ ability to meet monthly repayments are also causing difficulty in the mortgage market.
Age is just a number
Age may be just a number, but it’s one which is rising amongst first time buyers. The average age of a first time buyer is now 30, making these long repayment terms even more troubling. With 30 year mortgages started at 30 years of age, many buyers could be repaying their debts until they are more than 60 years old.
But even with bad credit, mortgages don’t have to be a headache. For help, advice and assistance finding the right solution for you, call Just Bad Credit’s experienced team today on freephone 0800 9777840.