40 year fixed rate mortgage

[clearedforlanding]

Spain tried this after the 2008 housing bubble. 40 year mortgages have damaged a lot of people.

Tread with care.

[TheGreenBastard]

I looked at the website - and (as I said in the OP) you can make overpayments and repay early without penalty.

Most high street lenders will not give terms longer than 25 years which, for some people, puts the mortgage in the unaffordable category. I guess your attitude is that those people shouldn't have access to a longer term loan and be allowed to buy a home.

I was wrong regarding the flexibility of the mortgage on some specifics, but overpayments are typically allowed up to X amount on most mortgages.

It's not immoral to consider affordability of mortgage debt and restrict access based on some basic financials, the story of allowing anyone to get a mortgage has been played out before. Maybe 150 year mortgages like some other countries, where the debt becomes family debt are in order.

[ladymuck]

I was wrong regarding the flexibility of the mortgage on some specifics, but overpayments are typically allowed up to X amount on most mortgages.

It's not immoral to consider affordability of mortgage debt and restrict access based on some basic financials, the story of allowing anyone to get a mortgage has been played out before. Maybe 150 year mortgages like some other countries, where the debt becomes family debt are in order.

I get the point of checking affordability, absolutely. I'm more of the angle that having access to a product that gives a longer term - even if it's only a few extra years (they offer fixed rate terms between 10 and 40 years, 40 being the maximum) - could be a real help when shut out by lenders who only do 20-25 years.

I expect, but haven't checked, that there is an upper age limit (as you get with most mortgages). A 40 year term is for a young borrower, not someone in their 30's and above.

[SueEllen]

I get the point of checking affordability, absolutely. I'm more of the angle that having access to a product that gives a longer term - even if it's only a few extra years (they offer fixed rate terms between 10 and 40 years, 40 being the maximum) - could be a real help when shut out by lenders who only do 20-25 years.

I expect, but haven't checked, that there is an upper age limit (as you get with most mortgages). A 40 year term is for a young borrower, not someone in their 30's and above.

Aren't there lenders who do 30 years?

Anyway the entire point of this product is due to interest only mortgages being dangerous as many people don't have a repayment vehicle. With this you have a repayment vehicle.

[ladymuck]

Aren't there lenders who do 30 years?

Anyway the entire point of this product is due to interest only mortgages being dangerous as many people don't have a repayment vehicle. With this you have a repayment vehicle.

I thought there were lenders who did 30 years terms but not seen/heard much of them so just assumed that was a product which had dropped off

[DealorNoDeal]

Assuming it's a repayment mortgage (capital+interest)...

Are the monthly repayments that much less on a 40-year @ 5.5% than a 25-year @ 5.5%?

[SueEllen]

Assuming it's a repayment mortgage (capital+interest)...

Are the monthly repayments that much less on a 40-year @ 5.5% than a 25-year @ 5.5%?

Yes they will be.

[TheGreenBastard]

I get the point of checking affordability, absolutely. I'm more of the angle that having access to a product that gives a longer term - even if it's only a few extra years (they offer fixed rate terms between 10 and 40 years, 40 being the maximum) - could be a real help when shut out by lenders who only do 20-25 years.

I expect, but haven't checked, that there is an upper age limit (as you get with most mortgages). A 40 year term is for a young borrower, not someone in their 30's and above.

Fair enough, but how do you reconcile this view with your previous statement of "the unnatural propping up of the housing market that keeps prices inflated"?

[Paralytic]

Assuming it's a repayment mortgage (capital+interest)...

Are the monthly repayments that much less on a 40-year @ 5.5% than a 25-year @ 5.5%?

Quick google

£250K @ 5.5% for 25 years

Total cost of mortgage
£460,566
Monthly payments
£1,535

Same for 40 years

Total cost of mortgage
£618,924
Monthly payments
£1,289

So, £250 less each month, but look at that increased cost of borrowing!

[Whorty]

Fair enough, but how do you reconcile this view with your previous statement of "the unnatural propping up of the housing market that keeps prices inflated"?

Beat me to it ... to me this is just another propping up of the housing market.

House prices too high? Can't afford a 25 year mortgage. No worries, we'll let you have a 40 year mortgage instead (which will help keep property prices high).

As someone who has a property and no mortgage, it's a great idea. It keeps me feeling rich as my property value is supported. But taking my personal bias out of the equation, I'm not a fan.

But, if it's what the market/consumer wants, who I am to argue?