Should I switch to a 40-year mortgage after losing my job? ...0

Question: I’ve recently lost my full-time job and I’m now working part-time. I’m currently on a tracker mortgage, but I’m struggling a bit with monthly payments. I’m thinking about switching from a 25-year mortgage to a 40-year term, at least for now, until I (hopefully) find a better paid job. Is that a good idea? What should I watch out for?

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In your situation, extending your mortgage term to 40 years could help reduce your immediate financial pressure. By stretching the loan over a longer period, your monthly payments would drop – sometimes quite significantly. That could offer some breathing space while you look for a better-paid role.

It also depends on whether your lender allows you to revert to a shorter term once you’re back on your feet. Some do, some don’t, or they might make you reapply, with all the paperwork and affordability checks that come with it. So before making the switch, have a frank conversation with your lender or broker about flexibility and the long-term implications.

It’s also worth bearing in mind that tracker rates are typically priced higher than fixed rates. If you’re not looking for the flexibility or the ability to make overpayments, that’s something to consider – particularly if you’re trying to budget on a tighter income.

On the other hand, if you’re after long-term stability, some lenders such as Perenna or April Mortgages now offer fixed rates of up to 30 years. The good news is that many of these longer-term deals still give you the option to review after five years without facing early repayment charges, so you’re not necessarily locked in for the whole term.

So yes, switching to a longer mortgage term could be a sensible short-term fix, but it’s just one part of the puzzle. It’s worth taking the time to look at your product options too – not just the length of the loan – so you’re balancing both flexibility and financial stability.

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