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June 13, 2007

50-year mortgage to be launched

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by Kay Mitchell

50-year mortgage to be launched

It has emerged that a UK broker firm is in discussions with a lender about launching a 50-year mortgage.

The Mortgage Lender commented that mortgages do not need to be restricted to 25 and 30 year terms. The organisation is developing and introducing a mortgage that would last for half a century. It stated that increasing house prices and longer life expectancy are all working against the usual 25-year loan. First-time buyers are desperate to get onto the property ladder so this mortgage could appeal to them.

By drawing out the term of the loan, the lender is able to lower the monthly repayments which could seem attractive but the downside is that by the time the mortgage ends, the homeowner could have paid an extra £100,000 in some instances. However, The Mortgage Lender said a rethink on how homebuyers finance their properties is unavoidable. It is now all about ability to pay and monthly income.

Many more people are seeing their home as their retirement fund so a 50-year mortgage would, in effect, become a way for them to invest and save for 50 years as well as a means for purchasing their home.

In early 2006, a mortgage company in California, USA introduced a 50-year mortgage so it appears that Britain will follow in America’s footsteps.

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