Disadvantage of Long-Term Mortgage

First-time buyers who consider opting for a long-term mortgage to help pay for their dream home are now being warned to consider the true cost of making repayments into retirement, according to a personal finance comparison site.

Moneysupermarket.com is urging first-time buyers to avoid arranging their mortgage over more than 25 years or they could end up still paying it off when they reach old age.

An increasing number of lenders are offering long term deals with some (eg HSBC and RBS) stretching the mortgage out over 50 years.

But the price comparison site warns that if the average age of a first time buyer is 34, they will still be making repayments on a mortgage well into their retirement and the total cost payable will also be increased over the term.

For example, a £166,250 mortgage on a £175,000 property would cost a first time buyer £109,168 more over a 40-year term, than if they had started on a 25-year term.

"With an increased retirement age an all too real prospect, it may make sense for borrowers to consider increasing the term of their mortgage — however, few first time buyers would be happy to picture themselves still saddled with a mortgage when they reach retirement age," said Louise Cuming, head of mortgages at moneysupermarket.com

So to find the best mortgage deal you now have to compare the market thoroughly and see through the introductory offers.