Two mortgages can have the same loan amount and interest rate but very different monthly payments. The difference is often the term: the number of years you have to repay the loan. A longer term spreads the repayments out, making each month easier on the budget, but usually increasing the total interest you pay.
A worked example: borrowing £200,000 at 5%
Assume a repayment mortgage, a constant 5% annual interest rate throughout, monthly payments, no fees and no overpayments. This is a mathematical comparison, not a prediction of future mortgage rates.
| Mortgage term | Monthly repayment | Total interest |
|---|---|---|
| 25 years | About £1,169 | About £150,754 |
| 35 years | About £1,009 | About £223,938 |
The 35-year option reduces the initial monthly payment by around £160 but, if the same 5% rate applied for the entire term, would cost roughly £73,200 more in interest. Actual mortgage rates commonly change over time, so real outcomes will differ.
Why the longer term costs more
Interest is calculated on the amount still outstanding. With a longer term, each regular payment reduces the balance more slowly. That means a larger balance remains outstanding for longer, giving interest more time to accumulate.
Four things to check before choosing a term
- Monthly affordability: Would a shorter term leave too little room for bills, savings or unexpected expenses?
- Rate changes: Can you still manage payments if your rate rises when a deal ends?
- Age and retirement: Would the loan extend into a period when your income may be lower?
- Overpayment flexibility: Some mortgages allow extra repayments, subject to limits and possible early-repayment charges.
Can you take a longer term and overpay?
Some borrowers choose a longer contractual term for lower required payments, then make voluntary overpayments when affordable. This may reduce interest and shorten the repayment period, but it depends on the mortgage conditions and on whether the extra payments are maintained. An overpayment is not the same as having a shorter contractual term: you may stop making it, whereas a higher required payment remains due.
Try it yourself: Change the term while keeping the mortgage amount and interest rate constant in the calculator. Compare both the monthly repayment and the total interest, not just the headline payment.
Explore the figures using your own assumptions.
Open the mortgage calculator →Life Figured provides general educational information and illustrative calculators, not personalised financial, tax or investment advice. Figures and assumptions may not reflect your circumstances.
