Getting a Short Term Mortgage

The average mortgage term in the UK is 25 years but much shorter is available. Here you will learn what the minimum mortgage term is, why you would get a short term mortgage, and how to get the best deal on one.

Are short term mortgages available?

Yes. Although a typical mortgage term in the UK is 25 years, pretty much every lender on the market can offer a shorter one than this, but some have a lower minimum term than others.

Mortgages with 10-year terms are fairly common, though there are potential options if you need one as short as five years or less, assuming you meet the lender’s eligibility criteria.

What is the minimum term available in the UK?

The absolute minimum term at most mortgage lenders is around five years, but a smaller number offer 1-2 year terms, and a handful specific no absolute minimum at all.

Lenders who don’t specify a minimum term tend to decide what terms to offer on a case-by-case basis but can only offer terms that are in line with their product range. For example, if the shortest introductory rates period on their fixed-rate and tracker agreements is two years, they cannot offer a mortgage term that runs for a lesser period than this.

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Why get a short term mortgage?

Short-term mortgages can be useful for borrowers who are:

• Remortgaging with only a small amount of mortgage debt left
• Able to put down a very large deposit
• Buy a property to let out for a short time
• Renovating a property to sell in a few years
• Buying a new home while waiting for their current one to sell
• Seeking an alternative to a bridging loan

There are several other circumstances where a short-term mortgage. If you are unsure whether it’s the solution for you, get in touch for bespoke advice from our brokers.

Eligibility criteria

There are usually no specific eligibility requirements for short term mortgages compared to longer ones, but the lender may carry out additional checks to ensure you can afford your mortgage over a shorter term, as this will mean larger monthly repayments.

Your chances of securing a mortgage with a short term length will depend on the overall strength of your application. Being highly eligible for a mortgage means a wider choice of deals, including from lenders who offer mortgages over a shorter period than the norm.

Your eligibility will be assessed based on the following factors:

• Deposit amount: You will need at least 5-10% of the property’s value/purchase price to get approved for a mortgage under most circumstances.
• Credit history: The cleaner yours is, the better. It is possible to get approved for a mortgage with bad credit, but is more difficult and may call for a specialist lender.
• Age: This is less of an issue with shorter mortgage terms but your options might be restricted if you will be aged 75 or older during the agreement.
• Employment history: If you are self-employed, you will usually need at least two years’ accounts to evidence your income. If you are in full-time employment, most lenders will prefer you to have been in your current job for at least six months.
• Property type: Fewer options may be available if you are buying an unusual property, such as a listed building or one with non-standard construction.

Source: Knowledge Bank

Short term mortgage calculations

You can use our calculator below to work out what the repayments will be on a short-term mortgage. Enter the amount you need to borrow along with a term length, interest rate and repayment type, and hit the ‘calculate’ button to get some quick results. 

This tool is set up to provide calculations for a mortgage with a 5-year term length by default but can return results for mortgages with a term length as short as one year.

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Now that you have a better understanding of how much your mortgage will cost, you can compare rates and deals for free and speak to a broker on Teito - get started here.

Example calculations

The table below shows how the repayments on a typical capital repayment mortgage can vary when taken over different short term lengths. We have used a mortgage amount of £55,000 and an example interest rate of 5% for these calculations. 

Which lenders are available?

Below you will find examples of mortgage lenders who offer terms of five years or less:

Source: Criteria Brain

Things to consider

Here are a few things to bear in mind if you are applying for a short term mortgage:

Your monthly payments might be higher

Mortgages taken out over a shorter term tend to have higher monthly payments than long term ones, but you will pay less for your mortgage overall. This is because you will have fewer interest instalments to pay than you would for a longer term agreement.

The exception to this is interest-only mortgages, which have consistent monthly payments as you would only be obligated to pay off the mortgage debt itself at the end of the term.

Bridging finance might be an alternative

If you need short-term finance to buy a property, the most viable alternative might be a bridging loan. They are similar to mortgages but designed to cover a much shorter period of up to 2-3 years. Their main selling point is how quick they are to arrange and their flexibility.

You might choose a bridging loan over a short-term mortgage if time isn’t necessarily of the essence and you want to save money. Bridging finance is much faster to secure than a mortgage, but the interest rates and fees can be significantly higher.

Bridging might, however, be the alternative you need if you need to complete a transaction quickly or the property you are buying is considered to be ‘unmortgageable’.

Read more about the best alternatives to bridging finance here.

Lenders can change minimum term lengths at any time

The availability of short term mortgages depends on lenders’ product ranges, which are refreshed all of the time in line with the current market conditions.

A lender might claim they have no minimum term length, but whether you can get a short term mortgage from them will depend on what kind of fixed rate and variable mortgages they are offered. If their product line only includes 2 and 5-year fixes, they won’t be able to offer you a mortgage with a one-year term as this wouldn’t fit with their current offering.

How to get a short term mortgage

You can take your first steps towards applying for a short term mortgage on Teito. Here you can compare rates for free and speak to one of our advisers about your options.

Here are just some of the reasons our customers choose us for their mortgage needs:

• You can start comparing the latest mortgage rates in seconds
• Our brokers can access exclusive short term mortgage deals
• We are 5-star rated on leading review websites
• You can secure an agreement in principle in minutes

Ready to compare short-term mortgage rates for free and take advantage of a free, no-obligation chat with one of our expert brokers? Get started here.