Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in and we’ll get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at [email protected].
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?
Answer: First off, you’re not alone. Many people are feeling the pinch right now, especially with rising living costs and job insecurity. The idea of switching to a longer-mortgage term to ease monthly payments is something we’re hearing more and more.
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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.
But it’s important to understand the trade-offs. The biggest downside is that you’ll be likely to pay a lot more interest over the life of the mortgage. Even if you intend for it to be temporary, that extra time can rack up serious costs if you’re not careful.
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.
Since you’re on a tracker mortgage, it’s also worth thinking about whether switching to a fixed rate might give you more peace of mind – especially while your income is uncertain. Tracker rates move with the Bank of England base rate, so your payments can change at any time.
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.
A fixed-rate deal could offer more stability, even if just for a short term. You might want to consider a two or five-year fixed rate, which would allow you to review your options more regularly as your circumstances improve.
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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