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40 year mortgages & jobs

Journalist: Madeleine Ross, Daily Telegraph

ended 12. June 2024

Hi! 

I am writing about 40-year (and longer term in general) mortgages and the jobs that might struggle to secure them. I know that many lenders are doing this on an underwriter's discretion - but it's an interesting area!

Looking for those with mortgage expertise to comment on what they are seeing - and any ideas of the jobs that might struggle to get a longer term. 

Would be great to get people's thoughts! Thanks. 

12 responses from the Newspage community

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Dariusz Karpowicz
Director at Albion Financial Advice
It's becoming quite common for borrowers to seek 40-year mortgage terms to maximise affordability. With house prices outpacing wage growth, extending the mortgage term beyond the traditional 25 years is often necessary to meet affordability criteria and lower monthly payments. Let's hope the UK doesn't end up like Scandinavia, where 100-year mortgages are a thing. However, not all jobs are equal in the eyes of lenders when it comes to securing these longer terms. Generally, lenders prefer non-manual occupations, which are seen as more stable and sustainable into older age. Jobs that involve physical labour or have higher risks of early retirement due to health issues might struggle to secure a longer-term mortgage. This means professions like construction workers, firefighters and certain healthcare roles might face more scrutiny and challenges when applying for these extended terms.
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Ben Perks
Managing Director at Orchard Financial Advisers
As employers become more diverse and technology helps people to work for longer, the list of jobs available to the older generation is increasing. This means that lenders are considering more job types into later years. The main area of caution is anything manual, as most underwriters do not think that you can run up and down ladders and lug heavy equipment over the age of 70, so restrictions apply. Often it’s determined on a case by case basis and a good broker can help if your circumstances are extraordinary.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
It's more about the age at the end of the term as opposed to the term itself. A 25 year old should have no problem securing a 40 year mortgage term irrespective of what job they do. Generally, it's jobs that are more physically demanding like builders and those which traditionally have younger retirement ages (firefighter, police etc) where lenders will consider how realistic it is for them them to work in that role past a certain age.
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Simon Bridgland
Director at Charwin Private Clients
With 35-40 year mortgage terms now very commonplace, it can leave some people out in the cold not being considered for borrowing over such terms. Mortgage underwriting currently takes a pragmatic approach and will consider jobs where the individual isn’t likely to be conducting manual or heavy duty roles such as building trades or mechanics. If an applicant is self-employed and running their own business, but ‘off the tools’, underwriters will consider this as feasible if no longer taking a day-to-day part in completing work other than being perhaps office-based. Roles where the day to day tasks are easier on the body physically will be treated favourably as these can for obvious reasons be carried out for longer in people's lives. Often professional and academic roles will be treated to lengthier terms as these applicants can go onto compete other equally non-physical roles as they reach an older age.
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Justin Moy
Managing Director at EHF Mortgages
Mortgage terms are typically controlled by retirement ages, but with affordabilty issues, many lenders allow final repayment within that space between state retirement age, and say 75 or even 80 years old . Desk-based non manual work is more attractive to lenders, as that type of profession has a real opportunity to be continued beyond SRA, but lenders are looking for pension contributions on payslips, showing that there is the potential to both work and also retire and have funds to repay the smaller balance owing at that time. Those in manual professions will struggle, especially self-employed and contractors who may not be putting aside for retirement and struggle to convince a lender they can work at heights safely at 75.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Longer term mortgages are becoming more widely available but there popularity isn’t following suit. Aimed at the younger end of the market, to help to keep monthly repayments down at the start of your home buying journey, it doesn’t fix the main problems for aspiring homeowners; getting the deposit. For those fortunate enough to have saved up, inherited or been gifted a deposit, they are usually in a position to make repayments equal to what their rent would have been. This means they don’t need to go over the traditional 25-30 year term. Anyone with unpredictable working patterns, like contractors or freelancers or those in high turnover sectors like hospitality, retail or gig work, are likely to be more highly scrutinised by underwriters. They might also have questions about whether a construction worker could service a mortgage into their 70s.
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Craig Fish
Director at Lodestone Mortgages
Lomger term mortgages are becoming a mainstay at the moment in order to alleviate the pain caused by the higher interest rate environment and the rate shock that mortgage holders are suffering from at the end of their curently low fixed rates. Anyone over 30 is going to find this more tricky to accomplish as most lenders have a maximum age of 70, though some are okay to 75 or 80 as long as the occupation is non physical and desk based. Occupations that face difficutly are those that are physical like builders for example.
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Adam Stiles
Managing Director at Helix Financial Partners
Typically you see manual jobs or industries with a well known retirement age (military or emergency services for example) struggle to get the longer term mortgages to ages over 70, but my main concern with underwriter discretion with these things is when common sense doesn't prevail and they start becoming clairvoyants on a persons future. We've seen this in particular with TV and film personalities where the underwriter sometimes predicts how long their career will last!
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Elliott Benson
Owner at Sett Mortgages
Longer term mortgages, especially 40 year ones are becoming way more common among first time buyers.

I find most people I deal with prefer to take a longer term and then overpay at their own convenience

Most lenders are ok with a 40 year term and even lending to age 75 providing the client is in a job which isn't manual such as a builder or one which involves driving.

Jobs which are admin based and worked from home or from a laptop will just fly through as it could be done indefinitely
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Mortgage terms have been forced to rise to help keep pace with the rise in house prices, it has presented some interesting questions to lenders underwriting processes around employment and, overall, they have chosen to take one of two routes:

1) They assess you based on the job you have at the time of the application and assume you will maintain that job for the full mortgage term. This creates problems for manual jobs, as it is more likely that they will be unable to maintain that work for the term of the mortgage they are asking for and the lender will impose a shorter term.

2) The other route is to ask the question of the borrower. In many cases people are very aware of their limitations and many don't intend to continue in the same job as they have now, all the way to age 70. Many will already have thought about how their career and work could evolve over time to account for the possible issues that older age could bring.

Terms are increasing and lenders are having to adapt.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
The more interesting question is why people are having to borrow over 40 years when not that long ago the maximum was 35, a few years before that it was 30 and prior to that 25 years was the limit.

One of the main reasons is due to the stress tests that lenders are required to run, which a few years ago were calculated on a base rate of 0.50%, are now using a base rate of 5.25%.

So whilst many borrowers feel confident they could afford the monthly payments of a 25 year mortgage, the lenders will force them to have to borrow over a longer period to fit their calculations.

If you are one of these borrowers, remember that you can make monthly overpayments on your mortgage. You can work out how much extra you should pay so that you effectively reduce your term from 40 years to 25 years anyway and save a huge amount of interest by doing so.
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David White
Chief Operations Officer at Simply Lending
Extending a term has become more and more common in a Brokers tool belt when looking to ease affordability on a case but this option should never be taking lightly. Firstly we must be ensuring that working to a later age is actually plausible i.e can a Brick Layer work to 75? But secondly do they truly intend on working to that age? Honest and open conversations of which are well documented are required here to ensure people aren't setting themselves up for a timebomb at a later age.