Increasing a mortgage term from 25 to 35 years can increase the total amount of interest paid on a typical mortgage by 40%, according to Nationwide

The average first time buyer now requires a deposit of at least 20% to get on the property ladder, figures suggest. It comes as as affordability continues to outstrip earnings, with even mortgage terms extended.

Across the UK, a 20% home deposit now typically equates to 104% of the pre-tax income of a typical full-time employee, up from 87% 10 years ago.

Seven in 10 new homeowners are also taking out a 25-35-year mortgage terms, compared with just under half 10 years ago, according Nationwide’s report into housing affordability.

Around 70% of first-time buyers took out a mortgage with an initial term of more than 25 years in 2020, up from 45% in 2010, the building society said.

This can add significant costs on to a mortgage over the longer term.

Nationwide calculates that increasing a mortgage term from 25 to 35 years can increase the total amount of interest paid on a typical mortgage by 40%. However, overall, low mortgage rates have kept payments relatively affordable, it said.

Andrew Harvey, senior economist at Nationwide, said: In 2018/19, around 40% of first-time buyers had some help raising a deposit, either in the form of a gift or loan from family or a friend or through inheritance. This is up from around a quarter in the mid-1990s.

He added: The good news is that for those that are able to raise a deposit, the cost of the typical monthly mortgage payment relative to take-home pay has been trending down in recent years.

The research also looked at the cost of house prices in relation to average annual earnings.

Harvey said: At the end of 2020, the UK first-time buyer house price-to-earnings ratio stood at 5.2, close to 2007’s record high of 5.4, and well above the long-run average of 3.7.