How Long Will a Residential Mortgage Be?
When you take out a mortgage, you'll agree on a mortgage term with your lender. Think of the mortgage term as the lifespan of your loan – the time you'll have to pay off the mortgage, along with its interest and fees, in full.
The average mortgage repayment term is 25 years. However, some borrowers may choose a longer term to pay lower monthly costs. In 2023, for example, the number of first-time buyers taking out a 31–35-year mortgage hit a record high.
It's important to consider the mortgage term carefully. A longer mortgage term may be more affordable on a monthly basis, as you're spreading the cost across a longer period. But this would also mean the total cost of your mortgage is greater, as you would pay additional interest.
With some mortgages, you can pay more than the agreed amount each month. This is a useful way to pay off the mortgage balance faster. It can also save you interest. Many lenders will allow you to pay up to 10% of your outstanding balance without incurring charges if you're on a fixed or tracker rate deal.
How Do Mortgage Payments Work?
After your lender agrees to provide the funds for your mortgage, you'll get a breakdown of how much the monthly payments will be. How these mortgage repayments work will depend on the type of mortgage you choose.
With a fixed rate mortgage, these payments will stay the same for a set amount of time. This period is normally 2-5 years, but could be up to 10 or more.
If you get a tracker mortgage, your payments will vary in line with the Bank of England base rate. That means if the base rate goes up, so will your monthly payments.
Once the initial fixed or tracker rate ends, you'll move onto a Standard Variable Rate unless you move to a new fixed or tracker rate mortgage – this is known as remortgaging. When you move onto a Standard Variable Rate, your monthly payments will tend to be higher and will change in line with the Bank of England base rate.
There may be other rate types available and we will happily discuss these with you, should they be available and relevant.
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Residential Mortgages: Frequently Asked Questions
What is a residential mortgage?
A residential mortgage is a long-term loan from a bank or financial institution to help you buy a home. It allows you to spread the cost over many years.
How long is the average mortgage term?
The average mortgage term is 25 years, but some borrowers may choose terms up to 35 years to reduce monthly payments.
What is the difference between a fixed rate and a tracker mortgage?
A fixed rate mortgage has consistent payments for a set period, while a tracker mortgage's payments vary with the Bank of England base rate.
Can I pay off my mortgage early?
Yes, many lenders allow you to pay up to 10% of your outstanding balance without charges if you’re on a fixed or tracker rate deal, helping you save on interest. In addition to this, you can pay amounts of your mortgage by either Lump sums or monthly overpayments, just bear in mind that if you exceed to allowable amount without incurring any Early Repayment Charge (ERC)(normally 10%), , then you will pay Early Payments Charges(ERC’s), (unless you are on the Standard Variable rate for a product with no ERC’s).
What happens when the initial fixed or tracker rate ends?
Once the initial rate ends, you’ll move onto a Standard Variable Rate, which usually results in higher monthly payments that change with the Bank of England base rate.
How can Finance Factors help with mortgages?
Finance Factors offers impartial, clear mortgage advice in Maidstone, helping clients make informed decisions whether they are first-time buyers or looking to remortgage.
Are there other mortgage rate types available?
Yes, there may be other rate types available, and Finance Factors can discuss these with you if they are relevant to your situation.
For more information, visit our Home Page or check out our dedicated sections on First Time Buyers and Shared Ownership and Remortgages.
Phone: 07785 954074
Address: 2 Kingsbroom Court, Kingswood, Maidstone, England, ME17 3ST
Email: kbl@financefactors.co.uk
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
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The Financial Conduct Authority does not regulate some forms of Buy to Lets.
There may be a fee for mortgage advice. The precise amount will depend on your circumstances, but will be agreed with you before proceeding.
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