How Long Should I Take My Mortgage Out For?

Long or Short – You decide

A limited number of banks offer 40 year terms. However, the most common loan terms for a first time buyer are 30 and 35 year terms.This information is correct as at 15/07/2014

A benefit of a longer term mortgage is it provides a lower monthly repayment option to the borrower. However, longer mortgage terms will incur greater interest charges over the lifetime of the loan.

Below is an example of the monthly repayments on a €100,000 mortgage based on various terms
(Rate 4.45% – for illustrative purposes only, actual circumstances will vary):

Loan Term

20 Years

25 Years

30 Years

35 Years

Monthly Repayment

€630

€553

€504

€470


GREAT! LOWER MONTHLY PAYMENTS, BUT WHAT IS THE INCREASED COST IN INTEREST CHARGES?

The longer the term of your mortgage the greater the cost of interest charged. Using the example above, the total interest charged on a loan paid to completion as follows:

Loan Amount €100,000, Rate 4.45%
Term Total interest charged*
20 Years €51,000    (in addition to the borrowed amount)
25 Years €66,000    (in addition to the borrowed amount)
30 Years €81,000    (in addition to the borrowed amount)
35 Years €97,000    (in addition to the borrowed amount)

* Examples are provided for simple illustrative purposes only. Actual individual circumstances may vary.