The average first-time buyer will not pay off their mortgage until they are aged 63 years and 8 months, according to research from Mojo Mortgages.
The research found the average first-time buyer in the UK is 33 years and 8 months when they purchase their first home and, with an average mortgage term of 30 years, the average FTB won’t finish repayments until into their sixties.
Mojo Mortgages head of mortgages, John Fraser-Tucker, said: “While longer mortgage terms can provide some short-term relief in the form of lower mortgage payments they come at the cost of significantly higher overall interest charges over the life of the loan.
“Our research has found that with a 10 per cent deposit and the current average mortgage rate of 6.03 per cent, the total cost of an average-priced house (£264,500) varies significantly on the loan term.
“For a 25-year loan term, the total cost would be £461,400, which includes the principal amount and interest changes.
“However, if you extend the loan term to 30 years, the same house will cost an additional £53,760, bringing the total cost to £515,160.
“If you extend the loan term even further to 35 years, the total cost will increase by £110,640 compared to the 25-year term, amounting to £572,040.”
The research found that the age at which FTBs can expect to repay their mortgage can vary depending on where they buy, with buyers in London spending the most time with their repayments.
The average age of a FTB in London is 36 years and 8 months which, with an average mortgage term of 30 years, means they are predicted to pay off their mortgage aged 66 and 8 months.
The West Midlands and the South East followed closely behind this, with FTBs in these regions expected to pay off their mortgages at 64 and 5 months and 64 and 4 months respectively.
In contrast, Wales was found to have the shortest path to mortgage freedom, boasting the youngest average age for first-time buyers at 31 years old.
Coupled with an average mortgage term of 28 years, Welsh first-time buyers can expect to be mortgage-free by age 59.
tom.dunstan@ft.com
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