The Rise of the Ultra-long Mortgage

40-year mortgages are a cause for concern. Nowadays, the average age of individuals taking out a mortgage is higher than it used to be. This is because people have to wait longer to save enough to afford a home.

Harry Arnold, Director at Anderson Harris, says"When I started advising 11 years ago the average term for a mortgage was around 25 years. This gradually moved to 35 and now these 40 year terms are now common and widely offered. While it may be seen as financially reckless, many are forced in to this position as house prices have not adjusted as expected to higher rates. Often the bank will not deem the loan affordable if the term is not ultra long in length" .

With a 25-year mortgage, you become mortgage-free after that time. However, nowadays, many people can't afford the payments over this period, resulting in them paying a significant amount of interest.?We have provided a snapshot of those interest amounts over time—these numbers may shock you.

Harry continues, "The maximum mortgage term has been extended to 40 years, and the maximum age for mortgage eligibility has been raised to 75. This means people end up paying more interest over an extended period."?

Chapter two of our Capital & Interests series is now live: Beyond Avocado Toast. In it, we explore innovations in the mortgage market that could be alternatives to support individuals on their journey to home ownership. These alternatives offer potential solutions to the challenges posed by 40-year mortgages, providing a glimmer of hope for those seeking more manageable mortgage terms.?

Click?here?to read the full blog article.