Extend Mortgage Term

Ian Middlemass explains how extending a mortgage term works.

Why would someone want to extend their mortgage term?

We get a lot of enquiries from clients about this. Obviously, if you’re extending your mortgage term, you’ve got a mortgage already. People might want to remortgage because they want to borrow more money, or they want to move to a bigger house and they extend the term then. Or it might be to meet affordability, and make the payments a little bit lower.

At the end of last year we had quite an increase in mortgage rates. People are starting to feel the pinch, which is why enquiries have been driven so high recently. The cost of living has increased, and people’s energy bills have increased threefold or more. The cost of diesel, petrol and food… everything has gone up.

If you’re like me, you’ve probably cut back on things. I’m quite conscious about the electricity that I use, and I’ve reduced how much I put the heating on. People are more conscious about the food that they waste. So everyone is doing a bit.

I’m used to finding people a new mortgage deal where the monthly payments are lower because rates have gone down. Now, I’m delivering bad news, in that payments are going up. A lot of the time it’s not just £50, it’s £200 or £300. On top of the utility bills, food, everything I just mentioned before, people are struggling.

For any mortgage we always do a budget planner in terms of how much people can afford. If you’re going to extend we’ll treat it like a new mortgage, and make sure that you’re doing the right thing – because it’s going to have an effect on other areas.

But yes, it’s possible. It depends on the lender’s criteria, and you don’t want to extend the mortgage term into your pension age. You need to keep it manageable.

How does extending my mortgage term affect my repayments?

Extending is always going to make those repayments cheaper. But the interest element is always going to be the same. So if you extend the term, it’s going to take you longer to pay the loan off as you are reducing the capital by a smaller amount each month.

How long can you extend a mortgage term?

A number of factors would dictate this, including the age of the client and how far they are away from retirement. Some lenders can take you up to a 40 year term. It’s all about doing that budget plan. I wouldn’t want someone to extend my mortgage term because I wanted more money to spend on nights out.

Like any mortgage that we arrange we will do a budget planner and look at how much you spend on things. We will look at that and what would be the best for your budget.