How long do I have to repay my mortgage?
The length of a mortgage deal is referred to as a ‘term’ and the term will be agreed upon when establishing a new mortgage deal.
Most lenders offer terms of up to 25-30 years, although some may be longer or shorter depending on the type of deal that is secured with a lender.
Often, longer mortgage terms can lead to lower monthly payments, but this could also mean higher interest charges added to the original borrowed amount over time.
Shorter mortgage terms can be beneficial as well as it means that the loan is repaid sooner, which reduces the total amount of interest paid.
However, shorter terms often depend on the affordability associated with the borrower.
It is important to evaluate your current financial position, including income and any circumstances which could arise during the term of your mortgage.
What happens if I miss a mortgage payment?
Missing a mortgage payment may be detrimental when trying to borrow additional finance in the future.
If a borrower misses a payment, the lender will report the incident to credit reference agencies such as Experian or Equifax, which will result in a drop on their credit score.
When a borrower is behind on their payments, it is referred to as ‘Mortgage arears’. Mortgage arrears are a priority debt meaning they will need to be paid before other debts, like paying off a credit card.
As a mortgage is secured against the borrower’s property, lenders have legal rights to taking possession of the property in the case that a borrower is consistently unable to make mortgage payments or is no longer able to repay completely.