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 think Landlords owning rental stock is driving up property prices (and rental costs) far more than 40 years mortgages.

If I were 25, I'd rather have an affordable mortgage I'd be paying until I was 65 than be using my money to pay my landlords mortgage, watching house prices move ever further out of my reach until I risked still having to be paying a landlords mortgage for the rest of my days. People have to live somewhere, and have to pay to do so, either mortgage or rent. Surely better to be paying for a home you'll eventually own than one you never will.

I'm 40 we have a 30 year mortgage, we over pay monthly and have a mortgage that does not limit that. I do not anticipate still paying it in thirty years, but given the cost of everything else when you have young DC it's better to have a lower mandatory payment

I don't really understand what you want people to do. If this is the only way they can afford a house would you recommend them not buying and privately renting instead?

The world has changed house prices no longer match wages.

I'm in my mid 20s and I will probably take out a 35 or 40 mortgage, it's the only way.

It's fine in the right circumstances. Both my siblings got 40 year mortgages when they bought their first homes at age 22 and 23. 10 years on they've both moved house and when remortgaging got a 25 year one. I'm sure they'll remortgage again when the dc move out and they have more money.

YABU and silly.

Totally different economic factors to "your day".

Of course she would… she has rental properties.

We’ve just taken out a 40 year one in our mid 20s. Property price 200k. Repayments are £1000 a month. I’ve no doubt we’ll bring the term down at some point.

If we took it over 30 years we’d be paying so much a month. I believe you are very out of touch with how colossal repayments are right now thanks to interest rates.

I'd keep 40y mortgages but require lenders to send out much more information, throughout the term of the mortgage, including clear modelling of the costs of a 40y term compared to reducing the term and upping the payment, making overpayments etc. Every time a fixed rate comes to an end borrowers should be encouraged to consider reducing the term.

Would you also put a stop on people being allowed to rent for 40 years? I know I’d rather have a 40 year mortgage than rent for 40 years with no asset or equity at the end of it.

I think mortgages should be based on affordability, so if you can evidence you can afford a mortgage into your 70s then why not? I took a mortgage out for a longer term than I needed to manage the monthly payments, then reduced the term by a few years every time I re-mortgaged when salary increased / outgoings reduced. I never considered I was tied to a mortgage for the original term without any diversion from that!

I agree with you op but the problem is that the laws are made by people who have a vested interest in keeping property prices high.

Let’s be honest most people are taking out 40 year mortgages out of necessity - do you think people really relish the idea of paying off their mortgage well into their 60’s?! But it’s almost impossible to out-save the property market especially with rent being so high.

In my view it’s a mix of Landlords & also people getting a massive chunk of money off their parents / or an inheritance that’s driving up house prices. DH & I are the only people on our social circle who have bought without help. Most people I know have had huge amounts of help - my BIL owns 3 properties, (he rents out 2) and that was all down to inheritance.

We have a mortgage that takes us past our (self imposed) retirement age. We will, however, by then have grown up DC. So will downsize to a property with no mortgage. I see us as paying rent for the extra bedroom. We also could have passed affordability for a slightly shorter term but prefer to make overpayments as our salaries are increasing. I’m delighted we’ve had the financial tools to make these decisions.

YABU

If you took a mortgage out at age 25, they would be 65 in 40 years so perfectly reasonable.

I think there should be a 12 week amnesty period for all bought-to-let rental properties to be divested, before they are seized by the state and then rented out on a non profit basis

Pretty sure that could cure house and rent price problems more quickly than your radical suggestion

I bought my first place with a 100% guarantor mortgage which probably had people thinking similarly back in the noughties. My situation is now very different but I'm eternally grateful that this product existed and helped me on my way. I think it is very hard for people to get started and I'm not sure banning products that might help is the right answer.

If 40 year mortgages are now a thing then I'm glad that people have the chance to avail themselves of that facility rather than not get a foot on the rung of a ridiculous housing situation.

Are you trying to kick them off the ladder, having got a home for yourself? I can't imagine any reason otherwise since it's a decision that people would make for themselves without checking with you first? I'm sorry that people are in this position now, not having reasonable access to a manageable mortgage and paying through the nose for something that 20 years ago would have been easily accessible for many who now haven't a hope of owning their own home.

Your opinion that 30 years is more than enough is just that. A badly considered, navel-gazing viewpoint that matters not at all.

I bought my first flat on a 35 year mortgage with a 5% deposit and I'm doing fine, thanks. I would never have managed to save a higher percentage deposit as I was having to pay all my money out in rent to scrounging landlords and my savings couldn't keep up with property prices. The enormous savings I made by having a mortgage to pay instead of rent allowed me to build my emergency fund back up and then start overpaying the mortgage.

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

I've fixed this paragraph for you OP. HTH

Not sure why someone with rental properties thinks it's ok to demand other ways to manage the housing market when they're a huge part of the problem.

Oh I missed that!
The irony of a buy to let landlord complaining about governments allowing practices which push up house prices😳

The tenants didn’t, the op can use rent money as she pleases, people pay to live there, they aren’t doing the op a favour.

YABU. Simple because we have a 37yr mortgage, which we only went up to due to the crippling cost of living and interest rates coinciding with the most expensive years of our lives (childcare etc). I'm not losing my home because of Liz's Truss's mini budget catastrophe or Putin's big dick war.

That being said, I think the full term of any mortgage can be a bit of a red herring, and do not stay static over even 10yrs for many people – finances change, people downsize long before their time is up, etc. There is no way I am going to see out the 37yr mortgage term on this house – we will be out of the financial sticks in the next few years, will put whatever bit of inheritance or windfalls we may get into it, and will very likely downsize when the kids have grown up. So it's all a bit meaningless anyway.

They're helping her considerably though, leaving her with an asset that they will never have themselves. The sooner that this unfair practice is more balanced will be a great thing for many.

My French colleague tells me of the practice of 'generational mortgages' where each generation of a family takes over the mortgage of the same home, successively. I would definitely be in favour of that too.

OP and other landlords can look out for themselves. The property market should never have been allowed to descend into this greedy morass for the few.