to extend the loan term any further – but you’ll get a major helping hand from inflation. Inflation is an extremely powerful force, but it’s easy to miss because, year to year, it’s barely noticeable. Over a 25-year mortgage term though, its effect is huge. Let’s say you borrow £75,000 today (to buy a house worth £100,000) and pay off nothing but the interest. Assuming annual inflation of just 2%, its “real value” by the time you pay it back in 25 years will be only £45,000. At the same time, let’s assume house prices increase by 2% per year too – so the house you bought for £100,000 will be
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