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Have any of your clients taken out a 40-year mortgage term?

Journalist: Ruby Hinchliffe, The Telegraph

ended 30. August 2023

Looking for people who have taken out a 40-year mortgage term. Have any of your clients done this and would be willing to chat about why?

Also, how do lenders decide whether to issue such long terms? Surely there is a cut-off age before extending the term that much becomes unviable?

7 responses from the Newspage community

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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
We've had a number of clients take out a 40-year mortgage term (not fixed for that long though!).

Most lenders will generally lend until the eldest applicant's 70th birthday, with some going further than this. This assumes the occupations and type of work they do is viable to do at this age.

One of the main reasons for having a term this long is to reduce the monthly payments, which has been particularly useful recently when borrowers are coming off very low fixed rates.

More interest is paid over a longer term, but it's still a viable way to ensure payments remain affordable.
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Michelle Lawson
Director at Lawson Financial
As will all things mortgage related, these things aren't for everyone but useful for some. A 40yr term is as close to interest only as you can get and for first time buyers it can be useful for affordability and keeping payments down for now. No mortgage term is forever. As long as people are aware that they will pay more over the longer term than the shorter term there is a place in the market for them. Mortgages are very much initiative, innovative and circumstance driven so lenders are having to try and find new ways to make borrowing possible for more people in the current climate.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Many clients of ours have taken 40-year terms over the past few years. Always seen as an initial short-term option, with the plan to over-pay when they can, or look to reduce the term on a future remortgage or home move. Sometimes this makes sense if the clients are expecting a boost to their income in the future, maybe after qualifying for a professional role, where they can keep payments low in the short term, and then knock years off when their income increases. Some younger first-time buyers even with a 40-year term will still be well within their working lives at the end of the term, so not a major risk from that point of view. Of course, our recommendation is always the shortest affordable term for every client, to ensure the greatest saving of interest over the term of the mortgage, whilst keeping the monthly payments within their maximum budget. Lenders still have maximum age criteria, so not everyone will be eligible for a 40-year term.
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Elliott Culley
Director at Switch Mortgage Finance
I have had a couple of clients remortgage to the term of 40 years. These are first-time buyers, who want to get onto the mortgage ladder, but maximise their borrowing capacity, whilst keeping the payments manageable. They expect to reduce the term in the future, once interest rates reduce, but also most first-time buyers expect their income to rise in the future so would look at reducing the term at this point as well.

Most lenders will only offer 40 year terms up until the age 70, although some lenders will allow you to go past your 70th birthday.
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Elliott Benson
Owner at Sett Mortgages
I have had many clients take out 40 year mortgage terms, the reasoning being it can make the monthly payments that bit more affordable to fit into a monthly budget. Of course if the 4o years is going to take someone past their chosen retirement age then this will be a problem for the lender.

What we need to remember is you are fixed to the fix period, not the term and most people are going to move two or three times and each time the mortgage is going to be re-structured, not to mention if the client stays put and re-mortgages. The chances of someone taking a 40 year term and actually spending 40 years in a house with that mortgage are very low.
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Ashley Thomas
Director at Magni Finance
Most will allow longer terms subject to it finishing before their expected retirement age (up to 75) if using their current income source. If going beyond retirement age, lenders will factor in affordability with retirement income.

40-year terms are on the rise, traditionally it was 35 years as max but lenders are being more flexible. It is a good idea and makes sense as it allows people to reduce their costs and ensure the payment is manageable.
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James Bull
Mortgage Broker at JB Mortgages
40-year mortgages are particularly popular with younger first-time buyers who are expected to move house and change jobs in future, so they are happy to have slightly lower payments now and regularly review the term. Most lenders require the mortgage to be paid off before age 70, with a handful of lenders allowing even older than this if required. Ultimately the closer someone is to retirement the fewer options there will be with the term, as lenders are required to make sure a mortgage is affordable and lending into retirement is seen as a high-risk area for them.