Should I take out an ultra-long mortgage and what are the drawbacks?

It’s possible to get a deal for your property of more than 35 years, but be aware of the extra costs

(Getty Images)

SPONSORED BY TRADING 212

The Independent Money channel is brought to you by Trading 212.

Tens of thousands of people are taking out so-called ‘ultra-long’ mortgages in a bid to cut their monthly housing costs - and the number is on the increase.

Almost 130,000 people over the age of 30 took out mortgages with terms of 35 years or longer in 2024, data from the Financial Conduct Authority (FCA) shows, up from under 64,000 people just five years earlier.

The number has more than doubled over the past few years as mortgage costs have increased due to rising interest rates and higher house prices.

Opting for a longer mortgage term typically brings down your monthly costs, because the repayments are spread out over a longer period of time.

This can make ultra-long mortgages a good option for people who are looking to get on the housing ladder, but can't afford high monthly costs.

However, there are several downsides to longer mortgage terms, including that you will actually end up paying a lot more in interest over time than someone with a shorter mortgage term, if you don't remortgage to a deal with a shorter term later.

You pay interest on the amount of your mortgage you still owe, and this is added onto each of your monthly repayments. With a longer term, your monthly payments are smaller, so the loan balance reduces more slowly. This means you’re charged interest on a larger amount for a longer period of time.

How much interest will I pay?

Analysis for The Independent has found that if you took out a £200,000 mortgage for 25 years with an average interest rate of 5 per cent - not factoring in additional fees - your repayments would be £1,169.18 per month, and you would pay £150,754 in interest over the course of your term.

If you took the same mortgage out for 35 years, your monthly repayments would be lower at £1,003.53, but you would pay significantly more interest - £221,482 - over the total period.

ADVERTISEMENT

ADVERTISEMENT

That’s an additional £70,728 paid in interest over the extra 10 years, and you would be paying more in interest alone than you borrowed in the first place.

Taking out a longer term later in life could also mean you end up with a mortgage still to pay off in retirement, when for many people their income is lower as they become reliant on their pension savings.

In 2024 alone as the table below shows, more than 30,000 mortgages with at least 35-year terms were taken out by people over 36, meaning those people will still be paying their mortgage off past state pension age (currently 66, rising to 67 by 2028).

	Number of borrowers...	...with terms 35 years or more
Year	Age 31-35	Age 36+
2019	54,919	8,639
2020	50,895	5,911
2021	81,307	11,092
2022	89,322	16,170
2023	90,616	21,289
2024	98,370	30,338

What are the solutions?

To avoid paying more interest than you need to, you could take out an ultra-long mortgage to begin with, and then consider switching to a shorter term when you come to remortgage, if you're able to do so.

For example, your income may have increased during your first mortgage term, or mortgage rates may have fallen, making the repayments over a shorter term more affordable.

You could take out a five-year fixed mortgage on a term of 35 years, and then when you come to remortgage onto a new fixed deal, you could reduce your term to 30 years or even 25 years, bringing down the amount of interest you would pay long-term.

A fixed-rate mortgage locks in your interest rate for a set period - often two or five years - meaning your repayments won’t change during that period, unless you choose to overpay your mortgage.

(Getty Images)

Overpayments are another way to potentially shorten your mortgage term and reduce the amount of interest you pay over time, if you can afford to make them. You can usually overpay up to 10 per cent of your mortgage per year without incurring an ‘early repayment charge’, but this varies by mortgage lender.

As an example, if you took out a £200,000 mortgage with a 35-year term and overpaid 10 per cent of the balance every year (roughly £20,000 in the first year, reducing to £17,563 in year two, and so on) you would clear your mortgage in just 13 years, saving yourself around £84,500 in interest.

Zara Bray, a mortgage expert at wealth manager Quilter, explained: “Extending your mortgage past retirement age may be a sensible lever to pull in the short term, allowing other assets (such as your savings) to stay invested.

“However, the key to avoiding challenges with a long-term mortgage later in life is to regularly speak to your mortgage adviser/broker, as they will be actively scanning the market for improved rates or new products that address the affordability strain.”

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.