The spotlight in this weekend’s financial press was very much on newly announced Government plans to tackle the issues surrounding leasehold houses.
As the Guardian, Financial Times, and Telegraph all reported, the intention is to ban leasehold on future new-build houses, and also cut ground rent on new flats to a nominal amount. This news has been welcomed by campaigners, but there are calls for help for existing leaseholders already contending with increasing ground rents and difficulties when trying to remortgage.
There was also some focus on recent Bank of England data which revealed that, in the first quarter of this year, just under 16% of all new mortgages were taken out over a term of 35 years or more.
The trend for longer terms can be attributed to a number of factors – we are working until later in life, as well as buying our first home and starting a family at much later ages than previous generations have. Affordability will be a driver for many, and taking a longer mortgage term of up to 40 years will reduce monthly payments.
There are warnings that come with this strategy of course. The total cost of a mortgage will be higher if taken over a longer period of time, and as we age there is more of a risk of being unable to pay due to events such as ill health.
It’s a good idea, therefore, for borrowers to review this on a regular basis and consider either shortening the mortgage term gradually, or overpaying to clear the debt earlier.
What the papers said about leaseholds and mortgage terms