35+ year mortgages on the rise

I would agree that significantly more clients are taking longer terms to keep payments within their preferred budget, meaning that less capital is paid in the short term and more interest is paid overall.

However with the flexibility of mortgages these days it is highly unlikely a client taking a 35 or 40 year term is actually going to keep the mortgage for that long. They will fix in for 2, 3 , 5 or even 10 years then re-mortgage or move, at this point re-negotiating the deal and if rates are more favourable as expected, the term can then be reduced.

You then have the scenario where a client may sell and move meaning they will more than likely be starting fresh with a mortgage anyway and can then re-structure it to meet their needs.

To conclude, it is the fixed rate period which is fixed in, not the mortgage term

I suspect 35/40-year term mortgages will soon become the norm amongst first-time buyers and home movers increasing their mortgage debt. As 1% mortgage rates disappear into the ether and house prices continue to rise, we're already seeing more interest from borrowers stretching out their mortgage term to keep the monthly payments affordable. The upside is that you can minimise what you pay back on a monthly basis, the downside is that you'll pay more interest to the bank in the long-term. Focus on what priority is (paying less monthly vs paying less interest overall) and seek advice to fully understand your options.

With so many mortgage holders facing higher rates, it comes as no surprise that more people are seeking longer-term mortgages to try and make payments a little bit more manageable. Which is become a far more common subject with clients keen to push their term up into their later years of life.

This could be a case of kicking the can down the lane, as will significantly increase the total amount payable over the life of the mortgage with the extra interest incurred could lead to tens of thousands extra paid.

For those that do extend their term, they must review this regularly as there could be a real danger that they will have to continue working into the later years of life to fund their ongoing mortgage payments.

Absolutely no surprise in this. People still want to move or must extend their terms to reduce their costs. In our own study, we found that 65% of homeowners would be willing to extend their mortgages to mitigate higher interest rates. The obvious concern is that this provides short-term relief but leads to longer-term pain. Paying a mortgage over a longer period means paying more interest. However, for some borrowers, they simply won't have a choice.

Longer-term mortgages have not been uncommon for many years and it is simply a question of affordability. As house price inflation has run rampant for two decades with only a brief pause for breath after the credit crunch, borrowers have needed to extend the term to afford the payments. With many mortgages already at this term we are potentially kicking the can of affordability down the road, especially as it would seem the days of ultra-lower consumer borrowing as at an end and we may see further rises in costs. Maximising the mortgage term removes one tool to enhance affordability in the future.

A 35-year mortgage is a longer-term mortgage than a 30-yr mortgage. This means that you will have lower monthly payments, but you will also pay more interest over the life of the loan.
Here are some of the risks of a 35-year mortgage:
You will pay more interest. The longer you take to repay your mortgage, the more interest you will pay. This is because the interest is calculated on the outstanding balance of the loan, and the outstanding balance will be higher for a longer-term loan.
Your equity will build more slowly. Equity is the difference between the value of your home and the amount you owe on your mortgage. With a 35-year mortgage, you will be paying down your mortgage more slowly, so your home equity will build up more slowly.
In my experience, younger First Time Buyers, tend to opt for longer-term mortgages to reduce monthly repayments initially and as the year's progress, and circumstances change, start looking to reduce the term where it becomes viable and affordable.

I have seen a big rise in the number of clients who want to push their mortgage term until retirement. The sentiment seems to be that they'll reduce when the market is more favourable and overpay where possible in the meantime.

Unsurprisingly, to try to mitigate some of the increase in their mortgage repayments, borrowers are looking at longer terms. In reality, this is no bad thing, as it is a lower-risk way to control affordability than taking all or a portion of the mortgage on an interest-only basis. We should also remember that the repayment term is not set in stone, a 38-year repayment term might be right now, but on review in, say, 5 years you may be in a position to reduce the term; either because you have seen your income increase, or rates have fallen. The key is to see the repayment term as a tool you can use to help with your affordability, but always remember that you should have the shortest repayment term you are comfortable with, the longer you ultimately pay the mortgage over, the more interest you pay to the lender, so it's best to get it repaid as soon as you can, without stretching yourself to breaking point.

It's unsurprising given how high property prices are and the increase in mortgage payments many borrowers are experiencing. It's also absurd that people should spend 2/3rds of their working life to pay for a home. Lower house prices and higher wages are what's needed, not longer mortgage terms.

With mortgage rates now being so high compared to this time last year, a 35-year mortgage term or even longer, has never been so popular. A longer mortgage term has become a basic necessity for many mortgage borrowers up and down the country, trying to ensure their mortgage payments remain affordable on a month-by-month basis. The market is seeing a huge surge of applicants now requesting to take their mortgage term over as long a period as possible, to mitigate the considerably higher interest rate environment they are now faced with. Borrowers however need to be warned that although in the short term, increasing the length of their mortgage may help to ease the financial pressure on their monthly outgoings, it doesn't come without its risks. A longer mortgage term means paying considerably more in interest payments, and it also may mean that applicants will be forced to retire later in life to ensure they are still earning enough to afford their mortgage repayments in the future too.

There are huge benefits of taking a mortgage over a longer term and having the flexibility to overpay. Many of my clients have fluctuating income or are planning to start a family in the future and a longer mortgage term allows them a financial buffer when their circumstances change in the future. Whilst a regular overpayment facility allows them to repay the mortgage more quickly but on their own terms.

This is how longer term mortgages should be done. Not just because it creates a lower monthly outgoing...

The most important factor to consider the mortgage term is ensuring it is affordable. If you need a term above 35 years, it is better to do this than struggling to make the payment every month.

You will pay more interest with a longer term. However, you can mitigate this by making overpayments. You can also look to reduce the term in the future when it is more affordable.

This is becoming more and more common but should be entered into with caution - paying a mortgage over a longer term could mean tens of thousands of pounds in extra interest. Generally it's sensible to do the shortest term that you can comfortably afford as this you will spend less money in interest in the long run.

Longer-term mortgages, up to 35 years+, have been popular with mortgage applicants since before rising interest rates. This is due to the inflating price of properties over the past decade. It is true that longer-term mortgages are even more popular now due to rate increases, with some younger borrowers pushing for 40-year terms. In our opinion, this isn't a major worry as often younger borrowers' salaries over the next decade skyrocket, enabling us to revisit both the fixed rate term they are on and look to decrease the overall term of years for their borrowing at least a couple of times in reviews to readjust and save on interest charges where applicable.

Rising house prices forced people to consider longer mortgage terms last year, and this will only be exacerbated this year by the increasing interest rates offered by lenders. If the mortgage term is still being kept within pension age I don't see a huge issue. Gone are the days when a 25-year mortgage term is the norm. Older generations are renowned for the 'in my day we never did more than 25 years' comments, but lenders didn't need to offer them back then. If terms were restricted to 25 years for the current generation of first-time buyers, many simply would never afford a home.

We have seen longer term mortgages become increasingly popular options for buyers to support with affordability issues. However we don’t believe that terms beyond 35 years for most customers really make a whole lot of sense if you weigh up the additional borrowing gain versus the significantly larger amounts of interest they will pay over the term. A typical FTB borrowing £250K, over 35 years would pay £1,425.47 a month at 6% on a repayment mortgage - over 40 years it only drops to £1,375.53, so a £50 saving - hardly material - in return you pay an additional £60,557 in interest over the term.