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

Many people are living with parents!? But wages are absolutely crap and house prices high- that’s down to supply and demand not mortgage length. Lots of parents don’t want 25 year olds still living at home and due to the cost of living might need to downsize so there isn’t room anyway!

None of your business, really, is it?

House prices are hideous for younger buyers now compared to when you and I started out - if a 40year mortgage brings the monthly payments down to around what they’d be paying in rent on a similar property, I am all for it - most mortgages allow for you to pay off up to 10% during any year, so people can save along side or use bonuses etc to pay off chunks if they wish to.

No-one is, therefore, obliged to take 40 years repaying them, so I can’t really see why you’re so ‘anti’ something that has no impact upon you… other than it means you may not be able rent your properties out so easily if this becomes the norm? And it will disincentivise people from speculating with rental properties, hopefully freeing up more homes for young buyers?

In countries like Japan mortgages are over 100 years with children inheriting them so no properties and the loans attached to them are passed on providing long term security for extended families. Believe they’ve been discussed here.

IMO house prices got so high because of low interest rates. Should we increase them back to 6-7%?

People don't tend to buy one house with one mortgage for the rest of their lives.

House prices have increased out of line with wages.

It's lovely you managed to do all that and I am sure you will have a financially secure retirement.

But please - don't campaign to leave younger people today renting in an overheated market with no ability to save the fabled 10% deposit.

Your faux innocence and complete lack of empathy and understanding for those that will never benefit in the way you have is laughable.

'Why cant people save a larger deposit and live with parent like we did and our kids did before they put down large deposits

Sadly, too many people IMO want to run before they can walk.'

Err, because some people don't have parents. Because some don't have the option to live at home. A huge number need to go where there is work.

You are seriously controlling OP, can you hear yourself? If people don't do what you did then they shouldn't be allowed to buy a home !!

I'm probably the same age as you and even I can see how unfair and unrealistic you are being. Yours isn't the only way.

One of the things that people totally forget is that when self declaration mortgages were taken out the market it made it very very difficult for many that owned companies/ self employed to obtain mortgages unless they had 35% plus deposits- this then put many of these people into the rental market- quite a lot of whom are modestly high earners and certainly earn more than many PAYE employees - and often have a far better idea if any downturns are looming income wise... we only really earned enough to buy anything worth buying in the last 10 years when we were 52 plus and hence far far harder to get mortgages in the area we choose to live. So we have carried on renting - we could easily pay a £400,000 mortgage over say 16 years but at 10% deposit and would just sell up at the point we couldn't- I personally think like some other countries do that lifetime mortgages at a fixed rate make sense for many
and you sell up when it no longer works. In the meantime you can overpay as much as you want or pay lumps off if you inherit etc.

@DistinguishedSocialCommentator do you charge your renters a fair rent to allow them to save a decent amount towards a deposit? As you have no mortgage it’s pure profit apart from fees/insurance/some held back for maintenance… if you’re a good LL who actually maintains their property? Or have you used the opportunity with sky high rentals to your advantage and raised your rent? If it wasn’t for inheritance I wouldn’t have been able to afford my home as I couldn’t save for a mortgage while paying rent. My mortgage was cheaper than my rent and even with increased interest rates is still cheaper. People don’t stand a fair chance of showing savings for 2years when rents are so high, as there is very little money to spare and I don’t think from what your saying is the odd £50 each month, I couldn’t live with my parents to save as there are few job opportunities where they lived.

Yes... People owning homes they don't live in, and keeping them for profit, is what's pushing prices up, OP.

""You were lucky enough to buy your house years and years ago when the whole thing was far more affordable and achievable.""

If it was that easy - Then why was over half of the population in England still renting????

My parents moved from the north of England, house prices were a fraction of what they were in London and people over there could not believe what we/parents paid for a terraced house as over where we lived you could buy a done up mansion for that money

I guess people like you will be banging on about the same thing in 20/30 years, ie, property was so much cheaper in 2024

You’re treating a symptom not the disease with this approach. The prices rises are bad but just making more people rent doesn’t strike me as helping.

What?? "dont live in"??? Ours have always been rented out at hundreds below market rates. There are thousands of empty properties up north - people need to move up there just like we moved from the north to south ie our parents (see my previous post) moved at great financial risk to better their and our futures.

Nothing is for free unless you live in a council property and you, or someone decides to buy it for you at massive discounts

Agreed - so the Tories and Labour supported the sale of almost 2 million taxpayer funded council homes at up to 70% discount while fools like us were paying full process and massive mortgages - you get my drift!!

This thread is unbelievable. Someone smugly boasting of paying off mortgages years early and owning rental properties in the face of so many people who can't afford a mortgage or get out of paying extortionate prices in private rental. Someone else saying extending to 40 years won't do much to lower monthly payments. What? Been there and done that, so there. There's little reality or awareness in some people. It's as if it's all a plot by banks whereas the reality is that we have an economic system and circumstances in which people need to borrow and lenders need to lend.

Fortunately, nowadays you can take out longer mortgages because prices have been pushed out of reach otherwise, caused by factors of demand, supply and so on - well off 'haves' with investment buys or buys to lets are a part of it. Many lenders have extended their upper age limit for paying off a mortgage to 80 or 85 or removed an upper age limit altogether. It's even possible to take out a mortgage in retirement, subject to individual circumstances and affordability. It's good to have that flexibility because it has become a necessity for many people.

I don’t see the connection between the issue of the right to buy a council home with a discount, and your original post about 40 year mortgages.

It was in response to comments made about my declaration of having a couple of rentals that we have worked hard for, they were not given to us at discount. Ok.

Then others banging on about shortages of housing and blaming private LL's - I countered that with, 'council property up to 2 million given away at up to 70% discounts' being the problem - look up the posts if you wish

I bought my first house in 2002- 22 years ago. It was far far easier then.
We got an interest only mortgage with no savings. A 5% deposit. It wasn’t that hard at all. And guess what- house prices have risen so so much that now being interest only for a good few years hasn’t made much difference. We have a house double the size all because we were born at the right time to get a foot on the ladder. We couldn’t ever ever afford a house now on comparable wages.
You were also extremely fortunate to have been born at the right time. Yes you may have saved and been careful but you were born at the right time.
Don’t you forget that. Sheer luck and the fact that you can’t see that is party the reason why people trot out the term boomer so frequently.

Thank you. For you it may have been "far easier" but not for my parents who had a house that was paid off and then moving from the north to London - they sold their over 2k and under three k and ended up buying a terraced house for close to 30k - it was not easy.

Its not easy for the majority even then as around half of the households were in rentals

With respect, what is "easy" to one person may not be to another

Yes this. I see you are a multiple property owner OP therefore you are ‘part of the problem, not the solution’ (not my original quote but it is apt).

Of course they were forced to rent. Shelter is as much a necessity as food.

But that’s not the landlords fault.

@Abitofalark it's not quite that easy sadly, or we would have done it- it still seems to requirethat you have strong enough pension income still on the affordability criteria- and very few have. The fact you might say you will work till mid 70s or the fact it's likely you will inherit half a million and pay it off etc doesn't hold sway. If anyone knows a lender not working on that basis- do let me know!!

It will catch out those less financially literate, certainly
However my first home was a 25 year mortgage. I lived there approx 10 years, then took out another 25 year term when I upsized. So 35 years total.
if I’d moved again I would quite possibly have taken out another mortgage bringing me to above the 40 years you deem unacceptable.🤷‍♀️

I couldn't get a job where my parents lived. So I had to save what deposit I could while renting. Having done so and now I was no longer funding a landlord's pension I could over pay and get myself down to 60% within 5 years.

If it was that easy - Then why was over half of the population in England still renting????

@DistinguishedSocialCommentator the below explains the difference quite an easy to understand way, although the article is now 2 years dated.

'Interest rates of 6.43% may seem lower than the mortgage rates of 15% which borrowers were paying in 1980 for example, but there is a critical difference: surging house prices, driven by a lack of supply and historically low interest rates since the financial crisis of 2008, and the commensurate increase in household indebtedness, mean that the 6.43% mortgage rates of today are equivalent to a rate of 25.7% in 1980 (see Editors’ notes for calculation).

In 1980, the average UK house price was around £21,000 and mortgage costs accounted for 11.3% of disposable income (see Editors’ notes).

Today, with the average 2 year fixed rate mortgage on offer to new customers currently standing at 6.43%, those figures are around £292,000 and 45.1% respectively.

Housing is now at its least affordable point since records began. The average home currently costs 9.1 times the average local wage compared to 3.5 in 1997 (Source ONS).

This particularly impacts young people. Rates of home ownership amongst 25-34 year olds have collapsed over the last 30 years. In 1996, home ownership levels for this age bracket were 65%. By 2016, the level for this age group had fallen to 27% - giving them the label of ‘generation rent’.'

www.leedsbuildingsociety.co.uk/_resources/pdfs/press-pdfs/press-releases/housing-is-now-at-its-least-affordable.pdf