40 Year Mortgages

A report in the newspapers last week raised fears about mortgage lenders offering mortgages spread over a period of 40 years or more. This would mean that the average buyer who would purchase their first property aged around 29 would still be paying off their mortgage as a pensioner aged almost 70. Even more alarmingly, some lenders are offering a 52 year mortgage which would mean that an 18 year old would still be paying the initial loan at 70. In the cold light of day, it is a frightening thought to be committed to paying out a large mortgage payment from the day you turn 18 to the day you might retire at 70. One in four mortgage lenders are offering these loans, so they are all too easily accessible.

Although the advantage of such a mortgage is that extending the term of the loan does help spread the increasingly alarming cost of getting on the property ladder, debt experts warn that such a mortgage is potentially dangerous. Debt charity Credit Action warn that people are left vulnerable to any type of circumstantial change. It also means people have to work longer as they are not able to build any savings for retirement because they are committed to paying their mortgage. Longer mortgage terms can also mean that the customer will pay out a great deal more in interest.

When questioned about the advisability of such offers, mortgage lenders insist that they are only suitable for a very small amount of people, and they look into each individual case very carefully.