The situation with the mortgage market continues to evolve. It’s now becoming increasingly common for borrowers, including doctors and dentists, to opt for extending their mortgage terms. While this does end up being a practical solution to mitigating the soaring cost of living, it’s important to review the benefits and disadvantages to extending your term before committing to any agreement. Find out if extending your mortgage term is right for you by reading on.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
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Understanding the benefits of extending your mortgage term
One of the main benefits of extending your mortgage term is the immediate reduction in monthly payments. With the state of today’s high interest rates and escalating living costs, many borrowers find themselves needing to tighten their purse strings. By extending the term of your mortgage, you can alleviate a bit of the financial strain and make homeownership more manageable.
Another avenue borrowers might pursue to lower monthly payments is an interest-only mortgage. These mortgages offer flexibility, allowing borrowers to make overpayments when possible within certain annual limits, offering a semblance of control over their finances.
Lenders meeting demand with longer terms
Providers are listening to demand and responding with new offerings. Data indicates a significant shift towards the desire for extending durations. In fact, according to a Twenty7tec Mortgage Market Report, in 2023, 70.73% of mortgage searches were for terms of 25 years or more.
This reflects the growing need for more affordable repayment options, particularly when it comes to remortgaging searches, because borrowers are specifically searching for a better mortgage deal.
Considering the possible downsides
While extending your mortgage term or opting for an interest only mortgage might be the right solution for some, it’s important to note that it’s not for everyone. For some, the benefits of lowering their monthly payments in the short-term are outweighed by the fact that their interest payments will increase in the long-term. If you go this route, you could end up paying significantly more in interest, adding to the total cost over the life of your loan.
It’s also important to consider the fact that extending your mortgage term often means that you could continue to carry mortgage debt well into your retirement. If it’s important for you to be debt-free for retirement, a longer-term mortgage might not be right for you. If you choose to pursue this option, it’s crucial you consult with your financial advisor to understand the effect on your long-term financial plan.
Seek expert guidance for help with your decision
If you’re considering a long-term mortgage or simply want more information about your options to save money on your mortgage repayments, it’s essential to meet with an advisor who can provide tailored advice based on your unique circumstances and financial goals.
At Dental & Medical Financial Services, our team of experts specialises in assisting healthcare professionals with securing the best mortgage solution for them. If you’re a doctor or dentist looking to extend your mortgage term or if you’re curious about alternative options, we’re here to help. Get in contact with us today.