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

OP, speaking as a someone with many many years experience in both mortgage advice, and mortgage underwriting, with the greatest respect, you have absolutely no idea what you re talking about.

We bought our home 13 years ago, 35 year term and a 20 percent deposit. We've reduced it a little by paying off lump sums but keeping the term low meant we were able to extend the property without borrowing any further money, we live a comfortable ISH life and when Col First hit our mortgage payment didn't wipe us out.
I think so long as there's an age limit and I'm sure there is a 40 year term is fine

Yeah me too. Can’t fathom it out really. I’m baffled….

The reason people take out longer mortgages is presumably because they need to - they cannot currently afford the monthly repayments on a lower term. Many propose to overpay later when they can afford it, thus shortening the term.
But there will undoubtedly be a fair few people for whom overpaying just won't work out, and they will still be paying off the mortgage when they are retired. Together with many not being able to put enough into their pensions anyway, this is a disaster waiting for us in the future. If you think pensioner poverty is bad now, just wait.

I was about to respond but then I realised who the poster was, so fuck it, no point…

goady thread containing obvious hypocrisy from goady poster.

Oh god, you’re right.

So, a 40year mortgage simply means you can pay smaller monthly payments - which means you pay more interest over the period and less of the capital sum, but both buyer and mortgage provider are hedging this against the fact that when people sell on 5+ years time, their equity has increased significantly along with their salaries so that they can get a bigger mortgage next time.

The object of a longer mortgage is to offer a monthly payment that is equivalent to what buyers might pay in rent (ie affordable) where, although the debt itself doesn’t reduce that much in the short term, this is hedged against the increased asset value. It gets them on the property ladder and out of the rental market. At the moment 15% of mortgages are BTL - which means 15% of the affordable house market is out of reach of for first time buyers or people on low incomes who need to upsize.

These mortgages WILL make it easier for those people to break free of the rental trap and, obviously, will have an impact on house prices for 2-3 bed properties in certain/many areas. And likely mean that BLT landlords will a) not be as readily able to rent at current rates (if at all) and b) the value of their properties will come down as they are forced to sell OR they will have to lower rents.

On balance, I think this is a good thing.

So the only people I see actually losing out are people with a rental property portfolio. Well, tough. Over the life of the investment, owners will still have made a killing, they just won’t be able to continue doing so. Them’s the breaks in a capitalist market.

It's OK....the op has solved it all by saying those who can't afford the mortgage should just move to "The North".....let's make sure all the teachers, nurses etc etc are aware of this as that wouldn't be a problem to lose all of them from elsewhere.....

I'll try for one last time as I've posted this before at other MN's - IMO, the 40-year mortgages facilitate property price rises, fact.

Just because it's your opinion doesn't make it fact. Nor will posting repeatedly sway the vast majority of the thread into changing its mind and agreeing with you.

It's also a bit much to lecture the masses on buying property when private landlords like yourself are part of the reason why housing stock is low, pushing up prices.

Hi

With the greatest of respect, you would say that. You will be different to those that I met first hand that tried to push an endowment. One of them said it would "never happen," When I asked about what would happen if rates went up by XX percent - I had to remind the woman that a couple of years earlier interest rates had shot up. Then after we took out this mortgage, the rates shot up again

Please do not assume that just because of your job you know more than I do as I know enough about what to seek and what we want not what we are sold. Therefore, me knowing enough is enough for me to make an informed judgement and these days unlike when we took our first mortgage, there was no internet, therefore most people lacked knowledge and skills re mortgages.
Others having knowledgequalificationsin a certain field does not disqualify others like me from forming their own informed judgments and this has served me and many others very well, thank you

No offence, but I rarely trust people, even experts other than doctors and the others have to build their trust with me.

I've had enough poor experiences with financial advisors and lenders that has resulted in my own research and decided myself.

I'm sure there are many good ones like you but the ones I've met and heard about, especially around the time of endowment mortgages and we being told "not to worry as it won't happen" re interest rates, forgive me for being an expert in what I, we need

Endowments mis-spelling was on a big scale and as I said, I saw through it and avoided it. Fair enough to those who wanted to take the risk but the mis-selling probe and subsequent claims just showed what was happening with quiet a few lenders at the time,

Extending mortgage periods will drive up prices and not down but like everything, this is subject to other factors that are ongoing or may occur

Who said that - kindly quote that as I did not.

We moved south just like the politicians of the time were bleating "get on your bike" - our parents knew the future was in the south and it was a big risk, but it worked for us.

Mu parts lived in north London - we could not afford, safely afford a property there so we moved right across the city a good 20 miles from our parents to buy something that did no overstretch us

People move all of the time - I know of people that left London many years ago and more recently as they could get more for their money - people I know via family/friends and work moved to bedford, Brighton, one to Margate - Rochester - Gravesend - Grays etc as property was cheaper. However, those living in coastal areas and Bedford and one to Peterbrough - now the rail fares shooting up - they are considering moving back to london

people move all of the time

TBH, I want an apartment on park lane overlooking Hyde park, but I can't reslsiticly afford it -

It sure was a lot of words though!

@DistinguishedSocialCommentator

Your entry at at 14:20 says "There are thousands of empty properties up north...people just need to move up there."

No point in moving up north if that isn't where your work is, though.

and why not if you can get a job there, move your job there, self-employed etc

My parents moved from north to south and we moved 20 miles from parents home in north London as property is a lot more expensive there

people move, politicians recommend it - its historical - what is your problem with that??

People move countries, FYI therefore moving a a few miles, 20 miles 100 miles etc is no big deal

Not everyone can afford a property or have the ability to manage it, hence council housing - the same housing where 2 million properties were given away at at 70% discounts in some cases

Even local authorities house people in different areas I'm sure of it -

The hundreds of thousands working from home - many have moved and many may - so whats the big deal in reminding people of that? Along with the self employed and the thousands working for NHS, post office, supermarkets, education etc etc

Exactly.

Plus, once people are out of the 'paying for childcare years' then they are often able to make overpayments and reduce the term considerably.
Spreading it over 40 years, helps in the first few years, it doesn't mean you are going to keep it that long.

In our days - I do not recall having fixed rate mortgages

When was "our day" ?
I've had various fixed rate mortgages and we finished paying ours off 10 years ago.
I mean, obviously I didn't fix when we were paying 13 - 15% back in the early days, but once the century turned and people could breathe again, we had fixes.

I get your point op.

We have among the least affordable homes in the world, we really don't need any more things that make it easier for people to overstretch themselves to afford.

We need state managed increased supply of homes.

and why not if you can get a job there, move your job there, self-employed etc

My parents moved from north to south and we moved 20 miles from parents home in north London as property is a lot more expensive there

people move, politicians recommend it - its historical - what is your problem with that??

Why point blank deny saying it then?

Doesn’t make it a good idea though. If people need 40 year mortgages they likely can’t really afford the house. Prices will eventually drop if finance is curtailed anyway.

I personally think mortgages are good debt and am quite happy to have one for as long as possible.

Where is the cut off? 35? 30? When would be acceptable?

Thank you, exactly that

We also need to stop the give aways of social housing stock paid for by the taxpayers. People got up to 70% discounts it was like winning the lottery for some and to add insult to injury, the tenant did not have to buy it, others could on their behalf as I recall

the 40 year mortgages only encourage prie rises

After the most recent property price crash, government bange on about stopping nil deposits - I'm not 100% certain but I think some were offered on that basis in recent month or last year

Lenders, win, win the longer the mortgage term is.

People forget how food pries and utility prices along with council tax could really shoot up and what looked like a comfortable payment initially does not seem like that especially after rate whites. The bigger the loan, the bigger the increase via every percentage point

Totally agree re land banks. Imo councils should have the power to compulsorily purchase land if developers don't start building within a reasonable amount of time.

There's a brownfield site where I live that's had PP for 400 homes for the best part of 20 years. It's been sold from one housebuilder to another twice in that time, and there's still no sign of any work starting.

Not sure quite what you mean about "capping" private landlords, but if you mean capping the rents, I'm all for rent controls. And in principle, I wouldn't object to councils and HA's managing properties owned by BTL landlords, but I suspect those landlords would have apoplexy at the prospect.

I used to work in homelessness prevention and resettlement, and it was grim 10 years ago. I dread to think how hard it is to find places now.