Why don't people get longer mortgages?

bmouthboyo

Just a general curiosity,

Why don't people take out longer mortgages, say 30 years over 25 and just make over payments to match the same amount. Most people change mortgage providers when the fix expires don't they so it's not permanent.

Main benefit is you have wiggle room if anything ever went south employment wise and could fall back to standard payments which would be less.

ceb1995

bmouthboyo wrote: »

Just a general curiosity,

Why don't people take out longer mortgages, say 30 years over 25 and just make over payments to match the same amount. Most people change mortgage providers when the fix expires don't they so it's not permanent.

Main benefit is you have wiggle room if anything ever went south employment wise and could fall back to standard payments which would be less.

Ours is 40 years, could have gone for 30 year but would have been stretching the budget (and would have made things harder when the time comes when we have children in the near future) , we've not overpaid much yet but will be doing once other debts have gone. But i can see committing to that many years wouldnt be attractive to other people.

KatieDee

I imagine you'd end up paying a lot more interest over the longer term, which most people are reluctant to do. A lot of lenders also have a limited to how much you can overpay each year.

Thrugelmir

bmouthboyo wrote: »

Why don't people take out longer mortgages, say 30 years over 25 and just make over payments to match the same amount.

Life may get in the way. There's a difference between actually doing and intending too. Being committed to a certain amount is a good discipline to have. Far too easy to skip a months overpayment and plan to catch up in the future.

bmouthboyo

But if you change providers after intro offer and had paid over payments at same rate the shorter mortgage would have been you technically will be in exactly same position.

Example:

30 year mortgage at 1.9% - monthly payments 733 but overpay to 1000 opposed to a 25 year mortgage at 1.9% and pay 1000 a month.

I guess if you keep mortgage that length for entire time it would be more interest but if only until next remortgage worth considering.

Thrugelmir

bmouthboyo wrote: »

But if you change providers after intro offer and had paid over payments at same rate the shorter mortgage would have been you technically will be in exactly same position.

Example:

30 year mortgage at 1.9% - monthly payments 733 but overpay to 1000 opposed to a 25 year mortgage at 1.9% and pay 1000 a month.

I guess if you keep mortgage that length for entire time it would be more interest but if only until next remortgage worth considering.

With an extended mortgage term people would be more inclined to borrow more. Property is not cheap in relation to incomes. There's always that desire to get another rung up the ladder. As the property above is in a better location, gives access to a better school, has a larger garden etc etc.

Not disagreeing with you. I should add. Just that many people do not consider clearing their mortgage a priority.

theoretica

bmouthboyo wrote: »

Just a general curiosity,

Why don't people take out longer mortgages, say 30 years over 25 and just make over payments to match the same amount. Most people change mortgage providers when the fix expires don't they so it's not permanent.

Main benefit is you have wiggle room if anything ever went south employment wise and could fall back to standard payments which would be less.

Depends on how pessimistic you are feeling. Where overpayments are limited by the mortgage provider this has more flexibility to reduce payment, but a shorter mortgage term and higher minimum payment has more flexibility to increase payments.

dunstonh

Lots of people take out mortgages for longer than 25 years. However, 25 is the most common as its the term that is most optimal for most people. Once you go longer than 25 years, the annual cost of repayments doesnt drop as much. If you go shorter, the increases are greater relatively speaking. 25 years is the sweet spot. Hence why 25 years became popular.