The Question
I’m about to take out my first mortgage and I wondered if you could offer advice on the term, please? Is it better to spread the payments out to a lower amount each month over 35 years or to opt for a 25-year term and stretch to higher repayments?
David’s Answer
There’s a balance between the ‘rule book’ advice and the practical reality of managing your mortgage payments.
The general rule is to aim for the shortest possible term you can afford. This will reduce the total interest paid over the life of the loan and allow you to pay off the mortgage sooner.
However, many people choose a longer term, like 35 years, to lower their monthly payments. This increases affordability for day-to-day expenses but means paying more interest over the lifetime of the mortgage.
While a shorter term may save you money, it also locks you into higher monthly payments, which can strain your finances if other living costs increase.
One flexible option is to opt for a longer term (like 35 years) to keep monthly payments manageable. Then, if your financial situation improves, you can make overpayments or lump sum payments to reduce the outstanding balance faster and ultimately pay off the mortgage sooner.
In summary, the choice between a 25- or 35-year term should depend on your monthly budget. While a shorter term saves money in the long run, a longer term gives you more financial breathing room, with the option to overpay when possible.
Speak with an adviser to tailor the mortgage term to your situation.
Meet our expert…
David Jackson established Prestige Private Finance in 2014 after nearly two decades in the mortgage industry. With experience in London’s high-net-worth areas, David and his team offer empathetic and expert advice for your financial journey.
If you have a question for David please email kate.saines@emap.com or leave a message in the comments below.
