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Original poster

Should 40 year mortgages be banned?

231 replies

DistinguishedSocialCommentator · 13/05/2024 09:58

Reading and hearing more and more of this.

IMO, extending mortgages and making almost a norm re 40 years for many, and it was 25 years when we got our first and second mortgages - 40 years IMO is just fueling the price rises in property

AIBU seeking a ban on 40 year mortgages??

IMO, 30 yrs is more than enough and there must always be a minimum 10/15% deposit and a 2 year record of saving money. This IMO, will gradually settle property prices.

FYI, we paid off on our own property and a couple of rentals about 14 years ago possibly a bit more

NB: Of course, no government will agree to that as it will hold back national growth and ledners will definitely fight it as it hits their profits. But 40 years mortgage is more than a life sentence into

Our 25 year mortgages we paid off with 15 and 14 years respectively

40 yr metages benefits the lenders bigger profits and feuls property prices

https://www.standard.co.uk/business/hsbc-40-year-mortgage-deal-interest-rates-bank-of-england-marathon-prices-lender-bank-big-six-b1103513.html

OP posts:
Original poster
DistinguishedSocialCommentator · 13/05/2024 10:08

itsnotabouthepasta · 13/05/2024 10:02

It depends on the circumstances entirely. If you were buying a house at 23 (as I did back in 2008), then 40 years would be no problem. If you're buying a house at 53, then clearly 40 years is a huge problem.

But also house prices have risen dramatically. We were in our first house for 15 years and sold it for £100k more than we bought it - but it also meant that the house we then bought was £100k+ more than 15 years beforehand, so I hugely appreciate the fact that I was able to buy before houses became completely out of reach to most people

What I do think needs to be looked at is the fact that rents are so more expensive than mortgages. I personally think if you've got a history of paying rent for 3-5 years at £2k+ (as an example) then absolutely you should be accepted without a deposit for a mortgage of £1-15k (again an example) - there should be a way of being able to have a baseline mortgage rate for renters, that keeps the outgoing the same, yet uses the extra to pay off additional capital (if that makes sense)

The fact is at "53" years etc - IE lenders look at retirement ages, most lenders would not even lend 20 years - however, if you deposit was massive and the lender saw their risks covered then they may lend

Its all based on risk.

40 years is too long - and many don't know these days ie not fully digested the small print about "early repyaments" are often limited and these days people often went of fixed rates for 3/5 years until that is Liz Truss trashing of our nation.

In our days - I do not recall having fixed rate mortgages but I'm sure there was
I got the impression lenders just wanted to lend as long as they were reasonably certain to have their risk covered and would post to lend you more

OP posts:
NoTicket · 13/05/2024 10:07

So you took out a 25 year mortgage and paid it off with 10 years spare, but it is unthinkable that other people may do something similar with a longer term? Riiiigghht

TeresaCrowd · 13/05/2024 10:05

What @Yellowhammer09 said. People want a default lower payment and then overpay. We did similar, but a 25yr mortgage we aim to pay off in 15 (it’s a small mortgage and only has a few years left, so I appreciate even then housing was much cheaper). If we’d taken the 15 year we would have been tied to higher payments but having the longer term and overpaying means we can reduce what we pay if for example we had a month or two of reduced income without penalty.

neverknowinglyunreasonable · 13/05/2024 10:02

I wonder why someone with a property and a few rentals wants to make it harder for other people to buy their own homes. Curious.....

itsnotabouthepasta · 13/05/2024 10:02

It depends on the circumstances entirely. If you were buying a house at 23 (as I did back in 2008), then 40 years would be no problem. If you're buying a house at 53, then clearly 40 years is a huge problem.

But also house prices have risen dramatically. We were in our first house for 15 years and sold it for £100k more than we bought it - but it also meant that the house we then bought was £100k+ more than 15 years beforehand, so I hugely appreciate the fact that I was able to buy before houses became completely out of reach to most people

What I do think needs to be looked at is the fact that rents are so more expensive than mortgages. I personally think if you've got a history of paying rent for 3-5 years at £2k+ (as an example) then absolutely you should be accepted without a deposit for a mortgage of £1-15k (again an example) - there should be a way of being able to have a baseline mortgage rate for renters, that keeps the outgoing the same, yet uses the extra to pay off additional capital (if that makes sense)

Yellowhammer09 · 13/05/2024 10:01

I would very much doubt anybody would be silly enough to take out a 40 year mortgage with the intention of using up all those years. Everything is so expensive now and people are cash strapped, so lower monthly payments for 2/3/5 years is more manageable. They can overpay if they want, the key thing being that it's an option rather than being forced to pay a higher amount each month.