Mortgage past 65

lobsterbass

Hi there,

I wonder if anyone could offer some advice.
I’ve always assumed (incorrectly) that you can only get mortgages up until you are 65 – a friend recently told me that he has taken out a mortgage for 40 years, ending when he is 75.

Does anybody know if you need to have your pensions set with a retirement age of 75 (in this example) or does that not matter? I would like to take out a mortgage with a similar term but I think my main pension I pay into has an expected retirement age of 65 and it’s predicted income wouldn’t cover a mortgage payment!

On this subject, does anyone have experience of doing longer term mortgages meaning they are able to borrow more? My friend said he was only able to buy the house he wanted because the 40 year term kept the monthly payments affordable – would a mortgage lender still only be interested in my wife and my combined salary for how much they would lend us or would a mortgage over 40 years give us the opportunity to borrow more than we would be lent over 28 years for example as the payments will be lower?

Many thanks in advance.

GoingOn30

Extending mortgage terms to the likes of 40 years or to the age of 75 seems to be just another way of lenders giving people mortgages they can't actually afford.
Think of how much extra you'd end up paying in interest on a 40 year term.
If you can't afford the house without mortgaging to the age of 75 then you can't afford the house full stop.
People living beyond their means hasn't ended so well in the past.

lobsterbass

ah yes, I see your point.

Ours is more because we have a young child going into full time childcare for a couple of years so have that to factor but would either look to reduce the term and increase monthly payments when both are children are older but ultimately downsize once they have both flown the nest to something we can buy outright with whatever equity we have built up by then rather than actually plan towards paying a mortage until we are 75.

Thrugelmir

A 40 year term mortgage may offer low monthly outgoings but could proved a false economy.

As an illustration if you were to borrow £150,000 over 40 years and 25 years respectively at an interest rate of 4%. Then you would repay:-

40 years ~ Monthly £627. Total £300,916. Total interest £150,916.

25 years ~ Monthly £792. Total £237,527. Total interest £87,527.

For that 15 years extra. £63,389 of interest.

If interest was to average out at a higher rate. Then the differential would rise even more.