What is the longest mortgage term in the UK?

Longest mortgage terms UK

A mortgage term is the lifespan of your mortgage. It is essentially how long you must make repayments to your lender until your mortgage is paid off. If you have an interest-only mortgage, this will be until you’ve finished paying the interest on the original loan.

So, what is the longest term for a mortgage in the UK?

The most common mortgage term is 25 years, and the majority of lenders will stretch to 35 years. However, there are some lenders that have a maximum mortgage term of 40 years.

There is the possibility that a 50-year mortgage term will soon be available. In 2022, Perenna, a digital lender, was granted a licence by the Bank of England. Interestingly, this licence allows them to offer 50-year mortgage terms that are fixed for life.

This means your interest rate would be locked in for the full term, rather than the typical two or five years. While this mortgage is not yet available to customers, it could be soon.

When it comes to more specialised loans, such as equity release, mortgage lenders rarely set a maximum duration. Instead, the loan amount is paid off following the sale of your house, usually after you die or move into care.

What are the benefits and drawbacks of an extended mortgage?

Benefits

• Monthly payments will be lower as the total loan amount is spread across a longer time. This can be useful if you’re currently struggling to meet payments or want more budgeting room.
• It can be much more affordable for those who have smaller budgets. Due to the lower monthly payments, extended mortgage deals are perfect for those working on tighter budgets.
• If interest rates rise, you’ll be better prepared financially. By making your payments much more manageable it should be easier to absorb any increases from your budget should they arise.

Drawbacks

• Due to the length of the loan, you will pay more interest over time. Even if your monthly payments are smaller, the interest will add up over the years.
• Again, due to the length of your loan, you will be in debt for longer. This could affect your financial flexibility in the future, therefore you should always plan for the long-term as well as the short-term. Seeking expert financial advice can help prevent this.
• A longer-term loan can have an influence on your retirement planning, so you may need to rethink your plans.
• You may have a narrower pool of lenders to choose from – not as many lenders offer extended mortgage terms, so it can make it difficult to find the right lender.
• Any necessary insurance may be more costly.

Extending your mortgage term

Life throws us many hurdles, and there may come a time when you need to consider extending your mortgage term. Changes such as establishing a family can have an impact in two ways:

• The additional expense of your new addition, or additions, to the family.
• For some, a decrease in income due to a change in working hours or patterns.

Lenders are able to extend your mortgage term as long as the new term meets their requirements. This might be accomplished through a request to your present lender or by a fresh application to an alternate lender for a remortgage.

Following any increase, we urge that you continue to monitor your mortgage term throughout its duration. Your goal should be to decrease it again in the future if possible.

If you’re thinking about extending your mortgage, reach out today. Our expert advisers will be able to listen to your situation and advise you on your options.

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How does your mortgage term change as you become older?

While a lender may indicate that a mortgage may be put up for 35 or even 40 years, age will still play a key role in this. A lender must be satisfied that the mortgage will be manageable during its term. Therefore, any retirement plans, and the influence this may have on your income, must be considered.

Many people retire between the ages of 65 and 70, and many lenders base their lending decisions on this standard. If an applicant’s anticipated retirement age is 69, most lenders will accept a mortgage that will expire before their 70th birthday.

As a result, the highest age permissible is often 70. So, if you’re 45 years old at the time of an application, the maximum period many lenders would allow is 24 years.

There are certain occasions where a lender may lend to someone over the age of 70. Some acceptances include:

• Later planned retirement age: This must be achievable in the eyes of the lender. For example, a manual labourer suggesting that they would retire at the age of 85 is unlikely to be accepted.
• Evidence of pension contributions: Lenders may authorise a longer term if they are satisfied that you will have appropriate pension plans in place upon retirement, or if you are contributing to a pension.
• Retired already: If you are already retired, you are most certainly receiving some form of income, such as a pension.
• Affordability is not dependent on income: Some lenders will overlook an applicant’s age when determining the maximum term allowed, if their income is not considered to determine the loan’s affordability

What can a mortgage broker do to help you with your mortgage term?

After understanding your circumstances, a mortgage broker will outline the most suitable path for you to take. In some cases it may make sense for you to extend your mortgage, while for other times, leaving it would be more sensible.

Your mortgage broker will go through all the relevant information with you to ensure you secure a mortgage term that is right for you. They will also guarantee that you evaluate this, together with other components of your mortgage. This includes things such as the interest rate on a regular basis over its duration.

Frequently asked questions

How long may a Buy-to-Let mortgage be for?

Buy-to-Let mortgages are treated differently from residential mortgages, primarily because the property is an investment opportunity rather than a personal residence. As a result, a lender will look primarily at the rentable worth of the property to meet the interest due, rather than your own income from sources such as work or self-employment.

With this in mind, some lenders are significantly more liberal in terms of the period they will allow or, more specifically, the age they will allow a mortgage to continue until. While the lender may still have a maximum term of 35 years, for example, age is now much less important. Retirement dates are no longer as relevant, with some lenders indicating no maximum age at all on expiry.

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