Is 40 the new normal?

Fri, Apr 26, 2019

High property prices, deposit-strain on first time buyers and competition for business amongst a smaller pool of buyers have forced mortgage lenders to look at how they can make their financial products more affordable and attractive to a greater number of borrowers.

The result? A dramatic increase in the number of lenders offering 40-year mortgages – reducing monthly payments and so bringing that first rung of the property ladder (or a more expensive property) within easier reach, and homeowners paying off their mortgages well into their 70s will become the "new normal".

According to Andrew Grant’s mortgage partner L&C, borrowing £150,000 over 25 years at 2.5% would mean repayments of £673 a month. With a 40 year mortgage for the same amount and at the same rate you’d pay £495 a month – saving over £2,000 a year.

Of course, as you’re repaying the mortgage over a longer term you’ll pay more interest overall – but when financial circumstances improve you’re free to re-mortgage on different terms, or overpay by up to 10% a year free of charge (check your lender’s T&Cs first to see if any restrictions or penalties apply) reducing the overall debt faster.

Find out whether a 40-year mortgage could be right for you


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