Signing up to a 40-year mortgage could open the door to 3.25 million more first-time buyers in the UK.
Analysis by Santander shows that FTBs who currently cannot afford the average monthly repayments for a 25-year loan could potentially get on the housing ladder by spreading those repayments over a longer period of time.
According to the bank, those monthly repayments would fall by an average £263 when based on a 40-year mortgage.
However, many potential home buyers are still unaware of the financial advantages offered by a longer mortgage term, almost a quarter (23 percent) according to the Santander research.
Almost half of all buyers would consider a 40-year mortgage, which could save them £178,500 if they chose to buy rather than rent over the same time period.
A quarter (23 percent) said they’d take out a 40-year deal but then look to reduce the deal once their finances improved with 37 percent willing to pay more to reduce the length of time it would take to clear their home loan.
Santander has now extended its range of longer-term mortgages.
Miguel Sard, managing director of mortgages at Santander UK, said: “The possibility of owning a property may seem like a distant dream to some aspiring buyers, many of whom have found themselves locked in a ‘rent trap’ and unable to get on to the property ladder.
“By offering buyers the option of a longer-term mortgage, our aim is to address some of the affordability restrictions they face and support them in buying a home with more manageable monthly repayments.”
Santander’s research suggests around 15 million people will look to buy a home for the first time in the next five years. Of those potential buyers, FTBs will make up more than half of all property purchases.