In the past mortgages were nearly always for 25 years but things have changed and you now have a whole host of options. However, 25 years was the traditional option for a reason and this is still the best choice in many circumstances.

Shorter Mortgages 

As the length of the mortgage decreases the total amount you have to pay in interest will fall. This is clearly good news.

However, the amount you are paying each month will be higher, meaning that you will not be able to afford the same size mortgage.

Assuming an interest rate of 5% for a £200,000 mortgage the total amount of interest over a 25 year mortgage term will be £150,754 and the monthly repayments will be £1,169.

Over a 15 year term the total interest will come to £84,685 – a saving of £66,069.
 
However, the monthly repayments will be £1,582 – an increase of £413 that would put this size mortgage out of the reach of many.

That said, if you have chosen a property that is easily affordable and you can afford the higher monthly repayments, choosing a shorter repayment term can save you a very significant sum.

Longer Mortgages 

Longer mortgages can look very tempting as your monthly outgoings will be lower. However, this saving is illusory as the total amount of interest that you are paying will end up being more
 
For example choosing a 40 year term for the above example would result in monthly repayments of £964 – a saving of £205 when compared to a 25 year term
 
However, the total amount of interest over the life of the loan will be £262,908 – an increase of £112,154.
In the end choosing a very long repayment term is likely to cost you a very significant amount and leave you much less well off.

What about When I Remortgage? 

When you remortgage (i.e. change your mortgage provider to get a better interest rate) you will usually be given the option of taking the new loan for same term as remained on the old loan or choosing a new the term (for example extending back up to 25 years).
 
Extending the term may seem attractive because of the reduction in your monthly payments but it is the equivalent of choosing a longer mortgage term and will result in an increase in the total cost of your loan.
 
Therefore it is always wise to retain the existing term if possible and even cutting the term if your circumstances have changed and you can afford the higher monthly payments.