Together hikes maximum mortgage term to 40 years


Pete Ball

Together has extended the maximum term on its residential mortgage products to 40 years to help more first time buyers get on the property ladder.

The specialist lender hopes the extension will help bring down the monthly cost of borrowing for buyers struggling with high house prices and stricter affordability tests by spreading repayments over a longer term.

Pete Ball, pictured, 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.”

Data from the Bank of England (BoE) shows the number of 35-year plus mortgage deals has more than doubled in a decade. More than one in five – or 16.5% – of all new mortgages taken out in September 2017 were stretched over 35 years or more – up from just 6.55 in the same month in 2007 – a rise of 151% in ten years, according to the latest figures.

Monthly searches by brokers using the Twenty7Tech system to source mortgages of 30 years-plus almost doubled between January 2017 and August 2018, accounting for more than a third of total searches last month.

Those looking for deals spread over 40 years have risen from 9,305 in January 2017 to 26,829 last month, according to sourcing system’s data.

James Tucker, managing director of Twenty7Tec, said:

“Our data has shown a consistent trend towards demand for longer term mortgages over the past year, and we expect that shift not only to continue, but to become a normal part of the market going forward”.

Bradley Moore, managing director of specialist distributer Brightstar Financial, said 40-year terms could mean the difference between younger clients continuing to rent or buying their own home.  He said: “There’s an ageing population who are working later in life and mortgages with terms of 35 or 40 years can be a great move for borrowers struggling with affordability.”