Longer term mortgage loans

Ten years ago, a high percentage of mortgage borrowers had the option to take an interest only mortgage.  The benefit to doing this is that the monthly cost was far cheaper.  If you took a £300,000 mortgage over 25 years at 3% a repayment mortgage would cost £1423 per month when compared to £750 on interest only.

However, there was a problem brewing in that the average consumer was concentrating on the monthly cost and NOT on how they would repay the mortgage.

Interest only mortgages are still available but only to those who have a repayment plan or a higher net-worth borrower who could repay via earnings / dividends etc.

For other there are now some solutions and the best option to keep monthly cost down is to increase the mortgage term as many lenders will consider 35- or 40-year terms now.

In 2018 40% of borrowers chose to take a mortgage term which is beyond the old normal retirement age of 65.  This tells us that people are looking to work past this age!

The issue with a longer term is that many lenders used to only lend until age 65 and not beyond but nowadays many are happy to lend to 80, or have no maximum, especially building societies.  These lenders are using a common-sense approach as well as looking at what they will receive in retirement to service a mortgage debt… that is a refreshing change huh?

It you are already retired there is now an alternative to an equity release mortgage which ultimately meant that the interest builds up within the mortgage rather than being paid monthly meaning that the longer the borrow lived, the less equity there was to leave to beneficiaries.

This solution is a retirement interest-only mortgage.  It is so simple in that the lender lends and the borrower simply pays the interest monthly from their pension.  The benefit is that the debt remains constant.

We are happy to discuss any mortgage requirement.  We do not charge fees ever so there is no commitment or obligation from you apart from your time.