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30 Apr 2019

Santander launches 40-year mortgages - but can you actually get one?

We assess how realistic a longer mortgage term is for first-time buyers in their 20s, 30s and 40s

First-time buyers can now spread their mortgage repayments over 40 years with Santander. But are you too old for a loan that will span four decades?

Santander has extended the maximum loan term on its first-time buyer mortgages to 40 years - 15 years longer than the traditional 25-year term.

The move will give borrowers the opportunity to lower their monthly repayments, which could make it easier for them to be approved for a mortgage.

But Which? analysis has found that the maximum age limit on Santander's deals and other longer-term mortgages could mean older first-time buyers struggle to get one - and those who do qualify will pay thousands extra in interest.

Read on to find out more about 40-year mortgage terms from Santander, how young you need to be to qualify, and whether a longer-term deal is worth going for.

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Santander's 40-year mortgages

Santander has upped the maximum borrowing period on its mortgages from 35 years to 40 years.

The change means a first-time buyer borrowing £200,000 at a rate of 2% could pay £606 a month over 40 years rather than £663 over 35 years - which may be a big enough saving to make the difference between passing or failing the affordability assessment.

Santander claims the move will help 3.25 million first-time buyers get onto the property ladder sooner and break the 'costly renting cycle'.

However, it's worth pointing out that Santander has a maximum borrowing age limit of 75 or the age at which a customer plans to retire (whichever is earliest). So a 40-year mortgage from Santander is only a realistic option if you're aged up to 35, or younger if you want to retire before you reach 75.

Who can get a 40-year mortgage?

Which? analysis has found that there are currently 37 lenders theoretically offering first-time buyer mortgages with 40-year terms.

However, most lenders set caps on the maximum age you can be when you come to the end of your loan, so the products are only really suitable for younger buyers.

Our analysis of Moneyfacts data found that a third of providers had a maximum age limit that would mean borrowers in their late 20s and 30s might find it hard to secure the deal.

You can use the table below to find the banks and building societies that are willing to offer 40-year mortgages alongside our analysis of how young you need to be to qualify for the deal.

According to the latest English Housing Survey, the average age of a first-time buyer in England (excluding London) is 32.6, while for buyers in London it's 34.5. With more first-time buyers having to wait until their 30s, 40-year mortgage deals might not be a realistic option for many.

However, there are exceptions to this: a handful of providers including Beverley Building Society, Cumberland Building Society, Family Building Society, First Direct, Ipswich Building Society and Saffron Building Society don't set maximum age limits. These lenders instead employ a common sense approach to make lending decisions on an individual basis.

Other factors to consider

Your age isn't the only factor that could be a barrier to getting a 40-year mortgage. Lenders will normally ask when you plan to retire when considering your eligibility for a deal.

According to David Blake from Which? Mortgage Advisers, some lenders will allow a working age of up to 80 depending on the nature of your job. A manual worker such as a builder is unlikely to be accepted up to this age, but if you have a less labour-intensive job you may be able to pass this check.

Other lenders will permit you to borrow past retirement age if they can see you are contributing towards your retirement, ie paying into a pension.

Is a 40-year mortgage right for you?

Longer-term mortgages are becoming more common as lenders innovate to relieve the restrictions on how much people can borrow - and recent Which? analysis found that nearly all of the best-rate first-time buyer mortgages were available with 40-year terms.

But what would a 40-year term mean for your finances?

A mortgage of £200,000 taken out over a traditional 25-year term at a rate of 2% would cost £848 a month, while opting to spread that cost over 40 years can reduce payments to £606 a month. This can make it easier to pass a lender's affordability tests when you apply for a mortgage.

However, you should bear in mind that spreading your debt over a longer term means you'll be paying interest for longer, which really adds up. By spreading the costs over an extra 15 years, a borrower with a £200,000 loan would end up spending a whopping £36,400 more.

25-year mortgage term40-year mortgage term
Monthly repayments£848£606
Total repaid over the mortgage term£254,313£290,713

That said, if your finances improve you could remortgage to a deal with a shorter term or overpay your mortgage to reduce your debt and cut the time it will take you to pay it off.

Talk to an expert about your options

There are lots of decisions to make when taking out a mortgage, and it can help to get advice from an impartial expert.