There are many factors to take into consideration when arranging your mortgage with one of these being the overall term.  Certain restrictions can apply where your mortgage term is concerned so we’ve put a few of the main points here to help you along the way.

What is the longest mortgage term

When people consider for themselves, how many years can I get a mortgage for, many first thoughts are that a 25 year term is the maximum permitted.  However, much has changed and virtually all lenders will now allow a mortgage term of up to 35 years.  There are also a few providers that will allow this to be increased further to 40 years.

The Government has indicated its possible plans to enable longer term 50 year mortgages to be made available.  You can find out more about this here.  At the time of writing one new specialist lender has been granted a licence by UK financial regulators to offer mortgages with fixed rates up to 50 years.  Whilst not available right now, the lender plans to roll these out in the near future.

Where more specialist lending is concerned such as equity release and retirement interest only (RIO), mortgages lenders tend not to have a maximum term stipulated at all.

How does age affect your mortgage term

Whilst a lender may state they will allow a mortgage to be set up over a term of 35 or even 40 years, age will still play a significant part in this.  A lender has to be happy that the mortgage is affordable throughout its lifetime and as such any retirement plans, and in turn any impact this may have on your income, needs to be taken into consideration.  Retirement age for many is typically between the age of 65 to 70 and therefore it is this benchmark that many lenders work to.  Most will accept a mortgage to end before an applicant’s 70^th birthday where the planned retirement age of the applicant is 69.  As such, 70 is typically the max age permitted so, if you are 45 years old at the time of applying the maximum term many lenders will permit is 24 years.

Some lenders will surpass the age 70 subject to certain criteria.  Some of these can be:

• Later proposed retirement age :  This needs to be feasible in the eyes of the lender eg a manual worker advising they are going to retire at age 85 is likely not to be acceptable.
• Evidence of paying into a pension : Lenders may approve a longer term if they are happy you have adequate pension provisions in place upon retirement or at the very least, that you are contributing towards a pension
• Already retired : If you are already retired you are likely already in receipt of any income such as your pension
• Income not required for affordability : An applicant’s age can be disregarded in relation to the maximum term permitted by some lenders where their income is not used in relation to the loan’s affordability.

Can I extend my mortgage term

Life throws us many challenges, and throughout your mortgage lifetime there may be a point where you need to consider extending your mortgage term.  Changes such as starting a family where this can have an impact in two ways being, the extra cost of your new addition, or additions, to the family and for some, a reduction in income from a change in working hours or patterns.  Lenders are fine with a request of an extension subject to it meeting their criteria in regard to how long you now wish to take the term.  This could be done with a request submitted to your current lender or by means of a new application submitted to an alternative lender for a remortgage.  Following any increase, where deemed best for your situation, we recommend that you continue to review your mortgage term throughout its lifetime with the view of reducing it again in the future where possible.

What is the maximum term for a buy to let mortgage

Buy to let mortgages are looked upon in a different way to residential mortgages, in the most part as the property is an investment opportunity and not for your own personal use.  As such a lender, is predominantly looking at the rentable value of the property to cover the interest due and not your personal income from sources such as employment or self employment.  With this in mind, certain lenders are much more flexible in the term they will permit or, more so the age they will allow a mortgage to run until.  Whilst the lender will likely still have a maximum term of 35 years for example, age now plays a much less significant role.  Key dates such as retirement are now not so important, with some lenders stating no maximum age at all on expiry.

How can a mortgage broker help with your mortgage term

A mortgage broker can use their experience and knowledge to discuss the pros and cons of a longer or shorter mortgage term.  Some of the pros and cons for a longer term are as follows:

Pros of a longer mortgage term:

• Lower monthly payment for a capital and interest mortgage
• Better chance of meeting a lenders assessment of affordability
• Greater flexibility of your finances if looking to overpay
• Less chance of being overstretched financially in the future
• Better equipped financially if rates increase

Cons of a longer mortgage term:

• A higher amount of interest will be paid overall
• May impact on your retirement plans
• Potentially a smaller choice of lenders available to you
• Any associated insurance may be more expensive
• Can mean finances are spent elsewhere that are less beneficial to you

Your advisor can discuss these with you plus any others that they feel may be relevant to your personal circumstances and in turn look to ensure your mortgage term is over a length of time that suits you.  They will hopefully also ensure you continually review this together with other aspects of your mortgage such as the interest rate throughout its lifetime.

Try our affordability calculator below.