Possible proposals from the government to enable 50 year term mortgages was discussed by the Prime Minister Boris Johnson during his visit to Madrid. The scheme would involve the prospect of the property and outstanding loan to be passed on to children.
When asked about the scheme he said that this was something that they were considering.
“I do think there’s a lot more scope to help people with 95% mortgages, there are quite a few products available now, which we’ve tried to encourage.
“But also, we want to find all sorts of creative ways to help people into ownership.
“Last year, actually, we had 400,000 first-time buyers, that’s a great number, we’re starting to turn the tide, but it is crucial for this government and for our overall economic story if those numbers continue to be strong.
“We need young people to have the confidence, to have the deposits, the mortgage packages to be able to get into ownership.”
It is not a unique idea. These have been available all around the world with Japan being the pioneers of such schemes where they currently offer terms as long as 100 years.
The news has been received with mixed opinion in the industry. Whilst many will welcome positive steps in relation to the first time buyer market, one concern is that this will simply add fuel to the fire in regard to the issue of affordable housing. Where this may assist some would be buyers who perhaps would never have been able to purchase otherwise, it does little to tackle what some deem to be the root problem being that of housing stock. Views that by building more homes will assist supply that in turn will help stem house price rises would give a better solution to affordability.
We should perhaps however not be so quick to dismiss what to first impressions seems such a long term for a mortgage. Those with a little more experience under their belts will recall a time when 25 years was regarded as the typical maximum however it is likely true that there are many homeowners that simply would not own their homes now if this was still the limit and maximum terms had not increased to what we now see as more of the norm of 35 to 40 years.
Times have certainly changed over the years in the mortgage industry as it looks to keep pace with the ever changing world we all live and work in. In today’s environment borrowers see the value in reviewing their mortgage throughout its lifetime to ensure they have the most appropriate interest rate and this should also include the overall term. 50 year mortgage terms will not be for everyone but it is good to see that home ownership is on the governments agenda.
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