Mortgage Term: Why Choosing 35 Years Isn’t Always the Cheapest Option

Worried about high monthly repayment costs and thinking about spreading your mortgage repayments over a 35 year mortgage term?

With the ongoing cost of living crisis, many borrowers – especially first-time buyers – are wondering whether a longer mortgage term or shorter mortgage term is the right choice for managing their finances.

On the surface, it can help balance affordability with the total amount paid and reduce the immediate impact on outgoings. But while extending your repayment period can help your financial position at first, it can often result in paying significantly more interest overall.

In this article, we dive into all the costs, risks, and considerations that you need to know about mortgage terms, to help you decide whether a 35 year mortgage is right for you. Let’s jump in.

How Much More Does a 35-Year Mortgage Cost Compared to a 25-Year Mortgage?

A 35 year mortgage term will usually result in lower monthly costs compared to a 25 year mortgage term. However, because of the extended repayment period, opting for a 35 year mortgage can significantly increase how much interest you’ll pay overall.

Understanding the long-term financial impact when deciding between a 25 year or 35 year mortgage is very important. Looking at different loan durations can help provide a clear illustration on how much extra you might have to pay in interest over the life of the mortgage.

Here’s a simplified example based on a £250,000 mortgage at a fixed 4.5% interest rate:

As you can see, the 35 year mortgage offers the lowest monthly payment, but you’ll pay £80,046 more in interest compared to a 25-year deal. To put that in perspective, the repayable interest in this example of a 35 year mortgage term will accumulate to around 32% of your borrowing amount.

And so, “should I get a 35 year mortgage”, I hear you ask?  

As a general rule of thumb, it can be financially beneficial to select the shorter terms. However, there are ways to help reduce the longer mortgage term over time through Early Repayment. As such, if your financial situation improves in the future, you could make overpayments or lump sum contributions to shorten your term and reduce the total interest paid.

This method can provide you with both an initial reprieve through lower monthly repayments, while also helping you reduce the total interest you would typically pay over the full term. Working with a trusted mortgage broker can help you decide whether a long or short term is right for you, and how to adapt your mortgage as your circumstances change.

At Boon Brokers, our dedicated mortgage experts provide fee-free mortgage advice to help you make the most informed decisions that match both your current budget and long-term financial goals.

What Are the Risks of Taking a 35-Year Mortgage?

The main consideration before taking out a long-term mortgage is how much the mortgage will cost in total – this includes the total interest you’ll pay across the full term.

However, there are a few other associated risks with long-term mortgages. For example, a longer repayment schedule will slow down your equity growth, as more of your lower monthly payments go towards interest rather than reducing the loan balance. This can make it challenging to refinance or sell your home in the future.

Additionally, a lengthy loan term can feel like a financial anchor, causing prolonged strain on your finances, especially if you’re moving towards retirement or looking to save for other financial assets or pleasures.

Let’s take a closer look at some of the main risks of taking a 35-year mortgage term:

1. Higher Total Interest Paid

If you calculate the total interest to be paid on your mortgage options, you’ll discover that longer term mortgages will always cost more overall. This is demonstrated by our table example above and is because you’re agreeing to pay interest for more years.

As such, even if the monthly amounts seem much more manageable, the total cost of the mortgage after the full term ends can be significantly more costly.

2. Slower Equity Growth

A longer term results in more of your mortgage repayments going towards paying off the  interest, rather than reducing your balance owed. Because of this, your ownership – or equity growth in the property – is slowed down. In turn, this can make it harder to remortgage or sell if you haven’t built up enough equity in the property.

3. Long-Term Financial Strain

A mortgage is a massive financial commitment and can be a long term financial liability. Choosing to opt in for a longer mortgage term can result in stretching your mortgage repayments well into your later life, creating financial pressure at a time when income may be lower or you’re planning for retirement.

4. Reduced Flexibility

Low equity and high outstanding mortgage balances can limit your options when it comes to switching lenders or securing better deals. This is because many lenders require a minimum amount of equity in your property before they approve a remortgage. If you haven’t built up enough equity yet, your choices may be limited to fewer lenders or less favourable terms.

Furthermore, if property prices drop while you still owe a large portion of your mortgage, you could find yourself in negative equity. This means your mortgage debt is higher than the current value of your home. Negative equity can make it difficult to sell your property without covering the shortfall and can prevent you from remortgaging to a better deal, potentially locking you into higher interest rates for longer.

When Does a 35-Year Mortgage Make Sense for First-Time Buyers?

For some first-time buyers, a longer mortgage term might be the only way to afford their first home. If you’re searching the market for low deposit mortgages for first time buyers or are looking for the best mortgage deals for first time buyers, then extending your mortgage length could be the answer.

Let’s take a look at some of the main benefits of a longer mortgage term for first-time buyers to  consider:

1. You’re Struggling With Affordability

Many first-time buyers face affordability challenges, especially if they’re early in their careers, earning a lower income, or are concerned about the high cost of monthly repayments.

In these situations, a longer mortgage term can help provide a practical solution by reducing monthly outgoings. While the overall cost of the loan may be higher over time, spreading repayments over a longer period will still make buying a home more achievable in the short term – helping take that crucial first step onto the property ladder.

2. You Plan to Overpay or Remortgage

If your finances are stretched and you can’t afford a shorter term right now but expect your financial situation to improve, a 35 year mortgage could act as a stepping stone.

Once your income rises or your expenses decrease, you can start making overpayments – either regularly or in lump sums – to further reduce your outstanding balance faster.

It is important to check the terms of your specific mortgage products surrounding any Early Repayment Charges (ERC), however, most lenders allow overpayments of up to 10% of the mortgage balance each year without penalty. Alternatively, you may choose to remortgage to a shorter term when it becomes affordable, helping you avoid paying interest over the full 35 years.

3. You Expect Your Income to Rise

If you’re early in your career or starting out in a lower-paying role, a 35 year mortgage may provide the initial breathing room needed to get on the property ladder. But should you plan and anticipate a significant salary growth in the years ahead, a strategic mortgage plan can pay dividends.

This future rise in earnings can give you options, including making overpayments, reducing your term, or switching lenders completely for a better mortgage product that aligns with your new financial standing.

The key here is to treat a long-term mortgage as a temporary solution and not a lifelong commitment. Planning ahead and reviewing your mortgage regularly is essential to ensure you’re not paying more interest than necessary over the long run.

At Boon Brokers’, our trusted mortgage advisers can help tailor your mortgage plan to your long-term financial goals. We’ll help you create a clear mortgage strategy, identify opportunities to save through remortgaging or overpayments, and guide you towards the best mortgage deals for first time buyers and beyond. Our expert mortgage advice is completely fee-free, so you receive personalised support without any cost to your pocket.

Can You Overpay a 35-Year Mortgage to Save on Interest?

Making overpayments on a 35 year mortgage is an effective way to reduce the overall cost of borrowing. Through overpaying, you can shorten your repayment term and pay less total interest, helping you build equity in your property faster.

Here’s how overpayments can help you save on interest:

• Reduce the Mortgage Term: By making regular or one-off overpayments, you can shorten the overall length of your mortgage. Even small but consistent additional payments each month can help towards knocking years off your mortgage term.
• Cut Down Total Interest: Interest is calculated based on your remaining balance. And such, by reducing your mortgage balance faster through overpayments, you’ll pay less interest overall, potentially saving thousands over the full term of your mortgage.
• Help You Build Equity Faster: Overpayments will directly increase the proportion of your home that you actually own (your equity). With higher equity, you’ll have a better chance of remortgaging to a more competitive deal, or even moving home with greater financial flexibility.

Still asking “should I overpay my mortgage or reduce the term?”

Let’s take an in-depth look at an example of how overpayments can impact your mortgage:

As the table illustrates, by adding £200 extra per month to a standard 35-year mortgage:

• You could save over £55,000 in interest

And

• Clear your mortgage nearly 8 years earlier.

Having a mortgage overpayment strategy can help you manage interest costs more effectively. It gives you flexibility in the short term, while still allowing you to reduce the overall cost of your mortgage – especially useful if you expect your income to rise in the future.

Should You Choose a Shorter Mortgage Term If You Can Afford It?

A shorter loan term will typically result in paying less overall interest on your mortgage, build your equity in your property more quickly, and lead to owning your home outright sooner.

That said, whether a longer mortgage term or shorter term is the right decision for you will wholly depend on your specific financial profile and goals for the future. Working with a trusted whole-of-market mortgage broker – like Boon Brokers – can help you understand your options with clarity.

At Boon Brokers, our expert mortgage advisers will listen to your situation and provide tailored advice, specific to your situation, completely free. Whether you’re buying your first home or planning to remortgage, we can compare mortgage deals across the whole market to find you the best possible mortgage that matches your needs.

How a Mortgage Broker Can Help You

Choosing the right mortgage is one of the most important financial decisions you’ll make, and understanding the long-term implications of your exact mortgage term and agreements is crucial.

At Boon Brokers, we specialise in helping clients make confident, long-term mortgage decisions that match their financial goals and budget.

Whether you’re exploring long term mortgage options or want to know how overpayments could reduce your term, our dedicated mortgage advisers are here to help you. As a whole-of-market, fee-free mortgage broker, we offer completely fee-free advice – helping you access the best deals on the market without any cost to you.

Contact Boon Brokers today for a no-obligation chat with your dedicated mortgage adviser and start your mortgage journey with confidence.