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Are 35 year mortgage terms storing up problems for the future?

One in five first-time buyers taking out mortgages lasting over 35 years

A record 19 per cent of first-time buyers took out mortgages lasting at least 35 years in March, according to lenders’ trade body UK Finance.

Mortgage broker John Charcol says this is just the latest example of a trend in which mortgage terms have been increasing. 


A statement from the broker says: “There has been a correlation between property price and the length of the average mortgage terms increasing. 

“Historically terms of 25 years would have been many applicants’ defaults option, but there has been a steady increase over the last few years with FTBs choosing to take the mortgage over 35 and 40 years.

“Since the pandemic property prices have increased beyond expectations – partially fuelled by pent up demand and low rates – As a result client are having to stretch their budgets to get on the property ladder, the most common approach is by extending the term as thing bring down your monthly repayments.”

The broker says first time buyers are not the only applicants to have chosen to extend their terms.

“We have seen homeowners coming to the end of their fixed deal looked to extend also in light of increased mortgage rates and households’ expenditure such as utility and energy costs, look to extend to help soften their monthly outgoing.

“Lenders attitudes have also changed, more lenders now accept applicants below a certain age to lender beyond state age, stating the mortgage must end by the age of 75.”

But John Charcol is explicit about the risks when choosing a mortgage over a longer period.

“Firstly, by increasing the term of your mortgage, you can lower your monthly payments and reduce your monthly outgoings. However, doing this also means there will be an increase in the overall cost of borrowing as you’ll be paying interest on a more slowly reducing mortgage amount for a longer period of time.

“Lower monthly repayments might be useful as a short-term cost-cutting solution, but you want to ensure that you review the term each time your fixed rate comes to an end when remortgaging or reviewing your options when home moving.

“First time buyers do have the benefit of time, with earnings expected to increase during the mortgage term its important to continually review to ensure your circumstances and make the right decision which could save thousands in the long term.

“Homeowners with a longer term should also consider to overpayments. Each year fixed rate products typically allow you to make overpayments of up to 10% of the outstanding balance so you can pay off your mortgage quicker.”

The broker warns that another concern for extend terms are FTBs preparing inadequately for retirement.

The firm says: “We should be aiming for at least 15 per cent to be paid into our pensions each month to ensure a comfortable retirement. By extending the term and putting more income aside to pay your mortgage, or extend the term beyond state age will mean when it comes to retirement pension pots wouldn’t have had the time to increase.”

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  • icon

    The longer the better as far as I'm concerned.
    Having the lowest possible payment and the ability to make overpayments is far better than a shorter initial term where payments are a struggle. Very few people only buy one house in their life so will take out a new mortgage when they move. That may be for another 25 or 35 year term or it can be shorter if paying it off quicker is the priority. Retaining choices and flexibility in payment levels makes financial blips easier to deal with.
    Having a mortgage until death can be very beneficial from an IHT point of view. I certainly have no intention of ever paying mine off as it would just result in an even bigger pay day for the government.

    Richard LeFrak

    Agreed Jo, to be honest I am training my three daughters on how to keep the tax wolf from the door.


    My first mortgage was an endowment mortgage where I paid interest only to the Building Society and an insurance premium on an endowment policy to an insurance company.

    When interest rates hit double figures I cashed in the endowment policy and had an interest only mortgage on my main home for many years, eventually paying it off by remortgaging a rental flat.

    Managed sensibly interest only mortgages are not a bad idea, especially for younger borrowers who can have long term inflation reduce the value of their debt or increasingly use inheritances to pay it off.

    The interest is always based on the amount borrowed whereas rents are increased by inflation or market forces over time.


    But you either pay the tax man, or the bank on interest!! Either way, we lose!!

  • icon

    Well if we all do this where is government going to get the £23 billion housing benefit to keep all the single parent families and their secret spouses living off to tax payers and glorified.

    Richard LeFrak

    Stop the waste going out of the door and then there is enough for everyone, start with the Peloton World Champions & 3 day a week merchants working in the civil service, 23,000 off sick in the NHS (Scotland) with long covid some over two years! Think I have saved about 5billion without even trying.

    Part 2 will be the BBC

  • icon

    Answer = no.
    I would suggest 99% will redeem their mortgage well before the end of the term. What's the alternative? Rent forever? Kill entrepreneurial spirit and home ownership?
    I would suggest this is the only way many young families can afford a future.
    Take capital growth and the repayment element into consideration and this is a win win.


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