Mortgages set to last a lifetime

The crippling cost of purchasing a home is forcing thousands of new buyers to extremes to get on the first rung of the property ladder.

A study by online analyst Money­facts shows lenders are increasingly willing to stretch mortgages to keep repayments down. It claims one in four lenders offers loans over 40 years or more. A handful offer 50-year deals.

The average first-time buyer is in his or her late twenties, so borrowers could be in their eighties before they are free of debt. “The standard term considered for a mortgage in the UK was 25 years, but it is no longer enough for some,” said Julia Harris at Moneyfacts. “This is an astounding scenario which could mean paying off your mortgage during your retirement. ”

Royal Bank of Scotland brands, including The One Account and Direct Line, offer mortgages over 52 years and Intelligent Finance will stretch to 47 years.

Melanie Bien, associate director at independent mortgage broker Savills Private Finance, warned: “It is worth remembering that the longer the term, the more interest you pay. ” On a 25-year repayment mortgage of £130,000 at 5. 25 per cent, monthly repayments would be £779, and the total cost of the loan £233,700. The same mortgage over 52 years would cost an extra £146,117 in interest.

Lenders have responded in a number of ways to the difficulties potential buyers face — offering larger multiples of salary, 100 per cent loans, shared-equity and interest-only mortgages.

Each solution has its pitfalls. For example, buyers on an interest-only deal must organise a repayment plan to avoid being left owing the original loan at the end of the term.

Malcolm Hurlston at the Consumer Credit Counselling Service said: “With house prices rising faster than wages, people are going to have to take these bigger risks if they want to own their own home. ”

There is no sign of a slowdown in the UK housing market. Mortgage lending hit a record high in January, according to the Council of Mortgage Lenders.