A specialist mortgage lender is to offer a 40-year mortgage to first-time buyers. Together says its longer-term deal will help younger buyers get a foot on the property ladder by reducing their monthly repayments.
With most lenders looking for a deposit of at least 15 percent and often up to 25 percent, first-time buyers in the UK are struggling to save enough to buy their own home and ensure they can afford repayments once they do buy.
Pete Ball, personal finance CEO at Together, said: “There seems to be a significant shift in mortgage lenders going beyond the traditional 25-year or 30-year term, with lending over a longer period becoming the new normal.
A 40-year mortgage can offer borrowers greater flexibility, giving them more options when they come to finding finance for a new home. This could make this type of borrowing more attractive to many younger, first-time buyers, particularly in more expensive housing markets around the UK.”
Most mortgage terms run over 25 years with some buyers tying up 15- of 20-year deals to pay off a mortgage more quickly. However, in recent years, more lenders have offered longer mortgages.
Data from the Bank of England showed that in 2017, the number of new mortgages taken out over 30 and 35 years rose from less than 8 percent in 2005 to just under 20 percent. And the Bank’s figures show that 16 percent of all mortgages have terms of 35 years or more.