The economic crisis created a different line of thinking for not only house owners, but potential house owners as well.  This new line of thinking not only is contributing to how home owners view and act on remortgages, but the length of terms of mortgage lending as well.  The longer term mortgage loan is now becoming more popular.  The traditional length of a mortgage loan is 25 years.

More and more house buyers are looking at going long and preferring a mortgage term lasting 30 to 40 years instead.  Banks are happy to accommodate this type of house buyer as they have much to gain.

House buyers preferring to go with a longer term mortgage will ultimately end up paying more in interest, which banks can then make more money.  For example, a house buyer purchasing a £110,000 house at almost 5% interest in a 25-year mortgage will end up paying almost £190,000. 

In contrast, that same house buyer who decides to buy the same house in a 30-year mortgage at the same interest rate will be paying almost £210,000.  Banks are more than happy to allow the house buyer to extend the length of the mortgage term.

Buyers are also benefitting from a longer term mortgage.  They are able to possibly purchase a more expensive house.  Second, they are able to save on the monthly mortgage payment, even though they will pay more for the house at the end of the payment term.  Third, they are freeing up money to use on other expenses, especially when they are getting a start at the beginning of their adult life.

The latest data from the CML indicates that almost 35% of first time house buyers are going the way of a longer term mortgage loan.