According to Moneyfacts.co.uk, increased pressure on affordability has forced lenders to look at extending the life of mortgages, with a quarter allowing borrowing up to 40 years and seven lenders offering maximum terms of 52 years.
Julia Harris, analyst at Moneyfacts.co.uk, said: “Today’s buyers face two major obstacles. First, being able to borrow the amount needed to purchase the property and second, being able to afford the repayments. Most lenders have adopted a relatively simple way to make repayments more affordable – extending the maximum term of the loan.”
However, while raising the life of the mortgage can help those struggling to buy, Moneyfacts.co.uk warned of the extra cost in doing this.
It highlights that a 25-year repayment mortgage of £130,000 at 5.25 per cent would see an extra £25,000 added in interest if it was paid over 30 years.
Tony Capon, head of intermediary sales at Salt, said: “Lenders have an obligation to lend responsibly – if it’s inappropriate, they shouldn’t do it. But there are times when extended terms are right for the client.”
