Pros and cons of 'marathon mortgages'

Marathon mortgages are increasing in popularity by the day as the age of the average first time buyer increases due to rising property prices and a higher percentage of income being spent on running a household. As a result of the increased demand in longer mortgage terms in exchange for lower monthly mortgage payments, banks are turning attention to their later life strategy and how they can help clients with standard residential mortgages intro retirement. Historically, equity release was a solution for older borrowers but now banks are looking at ways to retain their back book for longer and therefore releasing mortgage terms and products with no upper age limit. The concern here is the legal process for a standard residential mortgages is far more light touch despite the similar risk

Marathon mortgages often help borrowers secure the mortgage they need to buy the property they want, but the extra interest they pay over the term can be huge. Just because you initially opt for a 35 or 40-year term does not mean you can't bring it down when you are in a better financial position. As homeowners get older, their finances often improve, allowing them to reduce the term when they remortgage, possibly after a pay rise or when they have less credit card debt or loans. Borrowers can also set up regular overpayments to reduce the amount of interest paid. If you sign up for a marathon mortgage, it is worth making a mental note to assess your mortgage and finances again in a few years.

It's helpful to think of marathon mortgages within the hierarchy of paths to homeownership. If you can't buy a home outright, buy it on a short-term repayment mortgage. If you can't afford a short-term repayment mortgage, a marathon mortgage of 30+ years is a perfectly good approach. You will pay more in interest over that longer term, but you'll own your own home – and this will almost always be better than renting for those 30+ years. In the weeds, particular mortgages terms and types will be better suited to particular people – a broker will help iron out the details. But if your primary focus is getting the keys to your own home, a marathon mortgage could be the perfect way to accomplish that goal, helping make the mortgage affordable and keeping monthly payments low. If you can afford more down the line, you can always remortgage to shorten your term, too. The big number can sound scary, but buyers should stay focused on what matters to them: owning their own home.

It is often either the cautious borrower or ironically the financially sophisticated borrower choosing a 35-year mortgage.

The cautious borrower values lower monthly payments because income and job security can feel less certain than they once did. Meanwhile, the more sophisticated investor recognises that keeping mortgage payments lower can free up cash for pensions and investments which may deliver far stronger long-term returns.

Most lenders still allow borrowers to overpay up to 10% annually without penalty, meaning a 35-year mortgage can still become a 10 or 15-year mortgage if circumstances improve.

The downside is simple — borrowers who only make the minimum payments will pay far more interest overall and could still be carrying mortgage debt into retirement.