Mortgages are traditionally taken out over 25 years, 30 years at a push but house prices have got so high that many would be homeowners have found themselves completely unable to get on the property ladder.
Mortgage lenders have found a solution offer a mortgage over a longer term so borrowers can afford the repayments. The catch is the borrower pays a lot more in the long run, and the lenders profits increase exponentially!
However, for many, it is the only way they can afford to buy a house. One couple opted for a 35-year mortgage with Northern Rock. Mr A is 36 years old, so the mortgage wont come to an end until he is past retirement age. However, he has an optimistic viewpoint, and believes that his working situation will improve in the meantime, therefore allowing them to pay the mortgage off far earlier. Its a gamble, but most people can safely assume that their earnings will increase as their career progresses.
For example, a mortgage of 200,000 over 25 years on a 2 year tracker mortgage (initial rate 4.79% rising to 6.5% standard variable) will cost 1,140 a month for the first 2 years, 1,329 from then on.
Take that same mortgage over 40...
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