Should 40 year mortgages be banned?

[DistinguishedSocialCommentator]

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

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.

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)

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.....

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.

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

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

No, people should have the option. It’s hard enough for people to get on the housing ladder atm.

Seriously?? How about this proposal stemming price rises?? How would that benefit those with BTL mortgages as many bank on not just rental income but good rise in values??

We bought our first house at 21 and took out a long term mortgage. We’ve lowered the term over remortgages and will overpay once our children are a bit older but it helped us get on the ladder. Early repayments are easy to make.

If 40 year mortgages fuel house prices then it's not positive.

House prices have to get to reasonable levels and government should interfere to force builders to release their land banks to build houses.

I also think private landlords need to be capped with councils and non profit housing associations taking over so private landlords are in the minority.

You can only get a 40 year mortgage if you’re under 30 anyway so I don’t really see the issue tbh. I think the most I’ve ever had is 35 years but we’ve got less now as my husband is older.

i don’t see the issue, we’ll all be working forever anyway and it’s nicer to have more money now , in the years that you need it with the lower payments.

Exactly. As someone who has had to take out a 35 year mortgage recently just to afford a modest property, I won't even consider the advice of someone like OP. You have no idea what it's like now.

Can you really not understand that the world has changed, house prices are way, way more than when you bought in comparison to wages.
Wages have stagnated. Rental prices are astronomical, everything is really expensive compared to 20-30 years ago.
This is why people are taking much longer mortgages with much less deposit. It’s not hard to understand 🙄

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

Perhaps take a second to consider your privilege here.

Hello
You have missed the point of my thread, IE to stem the price rises, steep rises and to protect lenders, as per my OP, and I reiterate, the buyer demonstrating the ability to save amounts to pay the mortgage and not put more money into lenders pockets

MN's may recall the ENDOWMENT mortgages and how many are now stuck with their initial loans not being paid off at the end of the 25/30 years - just fulled price rises IMO

Oh dear. You again. 🙄

40 years shouldn't be necessary but as most will be working for 55 years or even more then maybe it should be an option. I'd just prefer major reform of our economy and social system.

40 years IMO is just fueling the price rises in property

As is owning more than one property, surely? How about starting with limiting the number of properties a person can own? Or is that not a good idea because it affects you?

In that case, are 'Endowment mortgages' still available, why not go for that gamble? That put more money in lenders pockets and sadly, many were missold these mortgages as they did not understand or were advised re small print

They tried to sell us an endowment mortgage - we did not want the risk and had to say NO several times as the lenders made it look very tempting

https://www.theguardian.com/money/2023/jun/20/mortgage-ticking-timebomb-i-warned-of-has-exploded-says-martin-lewis

It’s a vicious circle. The easier it is to borrow money, the more people are prepared to pay. The more they are prepared to pay, the more sellers want.

I’m sorry but the fact you don’t know that endowment mortgages are no longer available shows how out of touch you are with this!

I bought my first house at 27 with a 40 year mortgage and 5% deposit because it was the only way I could get on the property ladder. I bought a property I didn’t like because it was the best of the bad bunch. I bought my next house at 33 with another 40 year mortgage, although a 20% deposit. The term is long because childcare is expensive. I am still expecting our salaries to increase over time and childcare to go down, so overpaying the mortgage will become easier and we will be able to shorten the term.

Those options were the only way for me to buy a house I actually like and want to live in for a long time because people have bought multiple properties cheap as a BTL, rented them out for extortionate sums of money and driven up the market. This has been aided by consecutive governments failing to build more housing and more social housing, cap the amount private landlords can charge especially for such shitty housing stock. The banks will obviously be making more money from these longer term mortgages but they aren’t the ones driving the housing market.

I’m sure a number of people who take these 40yr mortgages on have every intention of overpaying along the way. Salary increases and inheritance for one. For some it is the only way onto the property ladder. I was lucky enough to be able to take on a 25yr mortgage, and I don’t envy those who have to take on much longer ones, but the option shouldn’t be removed.

Funny that eh?

@DistinguishedSocialCommentator
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.

Lucky for the rest of the UK you're not the person in charge.
How do you expect people to save when they are paying high rents?
(oh, just spotted who you are..... in that case )

There are so many variables in people's circumstances that I can't see any advantage in such a ban.