HSBC UK is offering 40-year mortgages to help people on to or up the property ladder.
The bank said its longest-ever mortgage term could help provide people with lower monthly repayments.
However, by stretching repayments for a longer time period, borrowers could end up paying more in interest, and they may also need to consider how a longer mortgage could affect their retirement plans.
The 40-year term is available on new residential mortgage applications on a capital repayment basis, including first-time buyers.
For residential applications where there is any element of interest-only payments, HSBC UK’s current maximum term of 25 years will continue to apply.
Additional borrowing, either standalone or in conjunction with a remortgage, can now also be taken over 40 years.
HSBC UK has also increased the maximum term to 40 years for buy-to-let applications on both capital repayment and interest-only mortgages.
Sharp increases in mortgage rates over recent months may make the idea of a longer mortgage term more appealing to some borrowers.
We aim to help make mortgages more manageable with lower monthly repayments— Andrew Matson, HSBC UK
According to Moneyfactscompare.co.uk, across the market, the average two-year fixed residential mortgage rate is 6.72% and the average five-year fix is 6.21%.
HSBC UK has observed an increase in customers selecting terms of more than 35 years over the past 18 months.
Andrew Matson, head of mortgages at HSBC UK, said: “By extending the mortgage term we aim to help make mortgages more manageable with lower monthly repayments and home ownership a reality for our customers.”
HSBC UK’s 40-year mortgage is available via brokers from Wednesday and customers making direct applications will be able to apply from September 13.
