25-Year vs 30-Year Mortgage: How Much Does It Really Save You in the UK?

Buying a home in the UK naturally comes with a lot of decisions. What mortgage type do you choose, how much repayments are, and which lender should you choose? But what is sometimes hidden away beyond these obvious questions is your mortgage term itself.

While on the surface this might feel like a small detail, in reality, the mortgage term can be one of the biggest influencing decisions that can affect your monthly payments, total interest, and can influence how quickly you will be able to pay off your mortgage.

All of this leads to the pivotal question: Should you go for a 25 year vs 30 year mortgage term?

In this article, we jump into all the key differences between 25-year and 30-year mortgages. By the end of this article, you will learn how much interest you could save, how the monthly payments compare, and conclude with which mortgage term would be the best fit for your long-term financial goals. Let’s begin.

What’s the Difference Between a 25-Year and 30-Year Mortgage?

I know what you’re thinking – it’s time. Yes, choosing between a 25-year and 30-year mortgage comes down to how long you want to spread your repayments and how this affects your monthly costs and total interest. As such, on the surface level, a 25-year mortgage term will finish and be repaid after 25 years, meanwhile a 30-year mortgage will conclude after 30 years. But this only scratches the surface of what this means for your mortgage and long-term budget.

In practice, deciding between a 25-year and 30-year mortgage will often come down to how you want to balance your monthly affordability with long-term financial planning. Different mortgage terms will offer different repayment journeys and can have a real influence on your monthly budget.

A mortgage term can influence:

• Your monthly repayment amount
• The total interest paid across the full mortgage
• How quickly you build equity in your home
• Your long-term borrowing flexibility

In short: The phrase “mortgage term” simply refers to the length of time you agree to repay your mortgage loan. However, it actually plays a major role in how your finances will look over the years, from the size of your repayments to the total interest you will be charged.

So do you go with a shorter mortgage term or a longer mortgage term?

It really depends on your personal financial situation and plans for the future, but there are some key considerations to keep in mind when weighing up the difference between 25 and 30 year mortgage terms.

As a general rule of thumb, a shorter mortgage term will result in slightly higher monthly payments but a quicker path to becoming mortgage free.

On the other hand, a longer mortgage term will often provide you with more breathing room with lower monthly repayments, but typically results in paying more interest overall.

How Much Interest Do You Save With a 25-Year Mortgage?

Choosing a 25-year mortgage can make a significant difference to the total interest you pay over time. This is because the debt will be repaid sooner, with each month’s payment clearing a larger portion of the balance, ultimately helping to reduce the long-term cost of borrowing.

For example, a £150k mortgage over 25 years at a 4.5% interest rate would have higher monthly payments compared with a longer-term mortgage, but it can save tens of thousands in interest over the life of the loan. To see this in action, consider the table below:

As the table shows, on a £150,000 mortgage, the total interest builds up to an additional £100,028 over the full 25-year mortgage term.

This is because in the early years of repayments, a large portion of your monthly payments will cover the interest, rather than the principal. As the loan balance decreases, more of each payment goes toward the debt itself, which reduces the total interest you pay over time.

While the exact repayment amount and interest will depend wholly on your specific mortgage product, using online tools such as an interest calculator can help you see exactly how much interest you can save on a mortgage with a 25-year term.

How Much Interest Do You Save With a 30-Year Mortgage?

A 30-year mortgage can feel much more manageable and provide increased flexibility by spreading the loan over a longer period of time, lowering your monthly payments. However, the trade-off is that you will have to pay more interest over the life of the loan compared with a shorter term.

Using the same £150k mortgage example as before, only stretching the repayment to 30 years instead of 25 years, we can see the results of reduced monthly payments but an increase to the total interest paid by several thousand pounds.

Just as with the 25-year example, you can see that most of your initial payments will cover the interest rather than the principal. But, as the monthly payments are lower, the total principal that is reduced is also lower. As a result, the loan balance decreases more slowly, which increases the total interest paid over the life of the mortgage.

In the example above, the total interest amount builds to approximately £123,486 for a £150k mortgage over a 30-year term.

Want to get a better hold on your total mortgage costs?

At Boon Brokers, our dedicated mortgage experts can help you calculate your total mortgage costs with ease. We provide fee-free, whole-of-market mortgage advice that ensures you find the mortgage product that best matches your needs.

How Do Monthly Payments Compare?

Monthly payments can often be the deciding factor that sways buyers to select either a shorter or longer mortgage term. Even a small difference in the total term length can make a noticeable difference to what you will be required to pay each month.

However, as we’ve just explored, it will also determine how quickly you build equity in the property. This makes it important to understand how your chosen mortgage term influences the overall cost of borrowing.

To give you a clearer picture, we’ve created a summary comparison table below using the two examples of a 25-year and 30-year mortgage term on a £150,000 mortgage. These figures are based on standard repayment calculations and maintain a 4.5% interest rate at all times.

It doesn’t take long to see how the mortgage term can shape your repayment plan. The longer term makes the monthly mortgage payments more manageable, but the added years noticeably increase the total interest.

This is where Early Repayments (or Overpayments) can make all the difference. Many borrowers today select a longer mortgage term to help decrease their monthly repayments while making small overpayments when they are able to.

How Can Overpayments Help Reduce My Mortgage?

Some lenders will allow for overpayments. These are simply extra amounts you choose to pay on top of your usual monthly repayment. They can be occasional one-off payments or small regular additions.

Whether you choose a shorter or longer mortgage term, overpayments can make a significant difference. Adding even a small amount on top of your standard repayment can reduce the term and cut thousands off the total interest.

For many homeowners, this is where longer terms like a 30 year mortgage can provide financial flexibility. By selecting a longer term mortgage, you can benefit from the lower monthly repayment when money feels tight, but still have the option to make overpayments when your budget allows.

Over time, this combination of flexibility and financial planning can help you bring the total repayment closer to that of a shorter term, without locking you into the higher fixed monthly costs.

In short: Even a modest overpayment can help reduce the long-term costs of your mortgage as it allows you to clear your debt quicker.

Crucially, not all lenders will overpayments as an option, and so it’s vital that you check with your chosen lender. If your lender does allow for overpayments, the general policy is that you can pay up to 10% of your outstanding balance each year without any fees. But should you choose to pay more than this as an overpayment, then you may be subject to early repayment charges.

The rules and stipulations surrounding early repayment charges will be unique to your chosen lender and can vary between lenders. As such, it is always worth checking the specific terms of your mortgage before making larger payments.

Why Do So Many Buyers Consider a Longer Mortgage Term?

The difference between choosing a longer or shorter mortgage term can often come down to financial management and planning. As a general rule of thumb, longer term mortgages will reduce the monthly pressure of expenditure with a lower monthly repayment plan.

This provides borrowers with more breathing room for everyday costs or savings, and can provide enough room in a monthly budget to pay off a mortgage while saving for any unexpected costs.

Specifically, this additional flexibility can be particularly helpful for first-time buyers or anyone whose income may fluctuate.

Key Benefits of a Longer Term Mortgage Plan:

• Lower Monthly Repayments: Spread over more years, your monthly payments will be smaller, making day-to-day budgeting much easier.
• Greater Financial Flexibility: A longer term gives you room to manage unexpected costs, lifestyle changes, or fluctuating income.
• Option to Make Overpayments: You still have the option to reduce the loan term without committing to higher fixed monthly payments.

Ultimately, a longer mortgage term can offer a practical balance between keeping payments manageable now, while still allowing the option to shorten the mortgage through overpayments when it financially makes sense for you.

Should You Choose a 25-Year Mortgage in the UK?

A 25-year mortgage can be a more attractive option for buyers who want to prioritise owning their home sooner and reduce the total interest they will need to pay.

In short: By paying off the loan faster, you will be able to build your percentage of equity more quickly, potentially saving tens of thousands in interest compared with longer mortgage terms.

However, this does demand a stronger financial budget as the shorter the mortgage term, the higher the monthly repayment costs will be.

Key Benefits of a Short Term Mortgage Plan:

• Faster Equity Growth: More of each monthly payment will go toward reducing the principal rather than the interest.
• Lower Overall Interest: A shorter term will result in fewer years of interest accrual, and can make a significant difference to the total interest you will end up paying.
• Financial Clarity: Knowing the mortgage will end sooner can make long-term budgeting easier.

It’s all about selecting a mortgage plan that is right for you. By working with a trusted whole-of-market mortgage broker – like Boon Brokers – you can weigh up the pros and cons of a longer vs shorter mortgage term, tailored to your situation.

Is a 30-Year Mortgage Better for First-Time Buyers?

A 30-year mortgage can be a practical choice for many first-time buyers because it offers lower monthly repayments and greater flexibility.

A mortgage is a massive financial commitment, and so it’s no secret that for many first-time buyers, balancing the payments of a new mortgage with day-to-day living costs can be worrying.

Concerns will often include whether monthly payments will be manageable, how much room there will be for savings, and what their day-to-day budget will look like, including any personal spending and future planning.

As we’ve explored, a longer mortgage term can help ease these concerns. By spreading the loan over more years, monthly payments are reduced, creating more breathing space in the budget. This makes it easier to manage other financial commitments while still allowing room for overpayments later on.

Ultimately, choosing the right mortgage is about finding a solution that matches your needs, balancing affordability now with your long-term financial goals.

Final Verdict: Which Option is Better for UK Homeowners Overall?

If you’re trying to decide on whether a 25 year vs 30 year mortgage is best, then the answer will always depend on your personal circumstances.

While in simple terms, a shorter mortgage term will usually save you money overall, a longer term can offer more flexibility with lower monthly payments. Practically, the right choice will depend on your priorities, income stability, and long-term financial plans.

A 25-year mortgage is generally better if you want to minimise interest and you can afford the higher monthly repayments.

A 30-year mortgage can be helpful if cash flow is tighter or if you want more breathing room in your budget, even though you will pay more interest across the term.

It is important to note that both mortgage term lengths usually allow for overpayments. These can help reduce the mortgage term and cut the total interest significantly. Some lenders reduce the term automatically when you make overpayments, while others keep the term the same and lower the balance instead.

Reducing the term through overpayments is generally the most effective way to save interest, so understanding how your lender applies them can make a meaningful difference to your long-term costs.

In conclusion: Both mortgage term options will work best when paired with a smart overpayment strategy. But choosing the term that suits your current lifestyle should be a priority, and then using overpayments to shorten the loan when you can will provide you with a balanced approach to both monthly payments and opportunities to shorten the overall interest.

How Can a Personalised Mortgage Comparison Help You?

Understanding how your mortgage term will affect monthly payments, total interest costs, and selecting the right mortgage product for your long-term affordability can feel overwhelming.

With different lenders offering a vast amount of different long term and short term mortgage products, comparing everything on your own can quickly become confusing.

Thankfully, working with a trusted mortgage broker can make the process simple and straightforward.

At Boon Brokers, our expert advisers take the time to listen to your needs and to understand your financial goals. We make sure that you secure exactly what you want from your mortgage.

With whole-of-market access, our dedicated experts will compare mortgage deals from across the market, walking you through the pros and cons of each term length, and explaining how each mortgage will work practically for you.

As a completely fee-free mortgage broker, our expert mortgage advice comes completely fee-free, and we focus on finding the right balance between affordability, flexibility, and long-term savings.

Want to compare your mortgage options with personalised, fee-free advice?

Contact Boon Brokers today and explore all of your mortgage options with our expert advisers.