25 Apr 2019
Nearly half of homebuyers would consider taking a 40-year mortgage to get onto the property ladder.
Santander Mortgages also says that they could save £178,500 - 77% of the average UK house price - by acquiring a home rather than renting over the four decades.
With 67% of Britons saying they see renting as just a way of lining someone else's pockets, Santander has extended its mortgage terms to up to 40 years, giving more customers a way to manage the cost of buying a home and potentially break the costly renting cycle.
The bank's findings show that a 40-year mortgage could help 3.25million more first-time buyers get onto the property ladder. These are people who would otherwise not be able to afford the monthly repayments associated with a 25-year mortgage based on their salaries and living costs.
Santander says the cost of an average monthly repayment for a 25-year mortgage falls by £263 when spread over 40 years.
However, nearly a quarter of buyers didn't realise that spreading a mortgage over a longer term would mean lower monthly repayments.
Many people would look to reduce the term of a 40-year mortgage later down the line.
The bank says almost a quarter of homebuyers would seek to remortgage to a shorter-term if their finances improved, 37% would pay extra whenever they could to reduce the length and a fifth would look to remortgage to a shorter term when they moved house.
Miguel Sard, managing director of mortgages at Santander UK, said: "The possibility of owning a property may seem like a distant dream to some aspiring buyers, many of whom have found themselves locked in a 'rent trap' and unable to get onto the property ladder.
"By offering buyers the option of a longer-term mortgage, our aim is to address some of the affordability restrictions they face and support them in buying a home with more manageable monthly repayments."
Santander's research estimates that around 15million people are looking to purchase a property in the next five years, with data suggesting that first-time buyers are responsible for over half of all property transactions.
Financial services company Moneyfacts says that, at one time, mortgages typically had a standard maximum term of 25 years, but in the days of stricter affordability rules - not to mention higher house prices - those terms can now be extended for much longer than before.
Its latest research shows that 50.89% of all residential mortgage products currently available have a standard maximum mortgage term of up to 40 years - up from 35.93% five years ago, highlighting the changing landscape.
There are currently 2,604 mortgages with a maximum term of 40 years compared with 1,096 in March 2014.
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