Extending your mortgage term can lower your monthly payments, but it means you’ll take longer to pay off your mortgage and as a result pay more in interest over the lifetime of your loan.
The following illustration shows the impact of extending a mortgage term from 25 years to 35 years on an outstanding mortgage balance of £200,000 paying interest of 6%.
| The current term | The repayments after the 10 year term extension |
The monthly payments | £1,288.60 | £1,139.53 |
The total amount to repay over your whole mortgage | £487,835.82 | £642,357.82 |
The total amount of interest to pay | £287,835.82 | £442,357.82 |
Total increase to the interest payable |
£154,522.00 |
|
In this case, the Annual Percentage Rate of Charge (APRC), which shows the total cost of a loan over its lifetime, increases from 8.68% to 8.78%. This means the homeowner would pay an extra £154,522.00 in interest over the lifetime of their loan.
Please contact us if you’d like to see a personalised illustration for your mortgage with us. We’re happy to discuss this option if you’re struggling to make your payments, but because this option will cost much more money over time, it may not be right for you.