Should I Increase My Mortgage Term / Length?

If you’re remortgaging to get a lower rate of interest and to save money, you might be tempted to increase your mortgage term.

This could cut your monthly costs significantly.

Let’s assume you were offered a repayment mortgage (also known as a capital and interest mortgage) of £100,000 at an interest rate of 6 per cent.

If you had 20 years still to go on your old mortgage term, you might choose this as your new term. This would mean you’d repay around £716 a month or a total of just under £172,000.

But if you increased your term to 25 years, your repayment would fall to just £644 a month – and that might seem like a very good deal indeed.

But it would be a false economy.


This is because if you multiply £644 by 12 payments a year over 25 years, you get a total cost of almost £193,400 – meaning £21,400 more of your hard-earned cash has ended up in your mortgage lender’s pocket.

So if you can possibly afford it, take your new loan over the same term as remained on your old one.

Or better still, cut it even further – it will increase your short-term costs, but the long-term savings will be well worth it.

To find out what various mortgage terms would cost you – each month and over the entire term – use our mortgage calculator How much will my mortgage cost me every month?


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