The lender said a 40-year mortgage could help 3.25 million more first-time buyers get onto the property ladder, compared to a 25-year term.
Analysis of data by the bank shows that buyers could save £178,500, 77 per cent of the average UK house price, by buying a property rather than renting over 40 years.
Two-thirds of Brits said they saw renting as just a way of lining someone else’s pockets, but nearly a quarter of buyers did not realise that spreading a mortgage over a longer term would mean lower monthly repayments.
Many people would look to reduce the term of a 40-year mortgage later down the line: almost a quarter would look to re-mortgage to a shorter-term if their finances improved, 37 per cent would pay extra whenever they could to reduce the length and a fifth would look to re-mortgage to a shorter term when they moved to a different house.
When considering budgeting for monthly mortgage repayments, over half of prospective buyers would still want to maintain a certain quality of life, while two fifths must factor in other monthly financial commitments such as their car finance.
Saving for major life events is also a consideration for a third of potential buyers, while 28 per cent needed to consider saving to cover the costs of having children.
Santander’s research estimated that around 15 million people were looking to purchase a property in the next five years, with data suggesting that first-time buyers are responsible for over half of all property transactions.
Miguel Sard, managing director of mortgages at Santander UK (pictured), said: “The possibility of owning a property may seem like a distant dream to some aspiring buyers, many of whom have found themselves locked in a ‘rent trap’ and unable to get onto the property ladder.
“By offering buyers the option of a longer-term mortgage, our aim is to address some of the affordability restrictions they face and support them in buying a home with more manageable monthly repayments.”
Regional data analysed by Santander estimated that taking a mortgage over a longer term would have the biggest impact in the East of England, where 25 per cent more people looking to buy could afford to get onto the property ladder by taking a 40-year instead of a 25-year mortgage.
Around 20 per cent more people living in the South-East or London looking to buy in the next five years, would be able to afford monthly mortgage repayments when spread over 40-years.
Taking a mortgage over a longer term could also help over half a million people in the Midlands get a foot on the property ladder.