Major UK bank offers 'longest ever' mortgage term to help first-time buyers

A major UK bank is offering its 'longest ever' mortgage term to applicants from Wednesday (August 30) which is set to help many first-time buyers get a foot on the property ladder. HSBC UK will now give people the opportunity to take out a mortgage over 40 years which is the maximum term available in the UK.

The bank said its long-term mortgage could help lower monthly repayments and is available to a variety of applicants, including first-time buyers and buy-to-let landlords. However, by stretching repayments over a longer time period, homeowners could end up paying more in interest - and they may also need to consider how a longer mortgage could affect their retirement plans.

Sharp increases in mortgage rates over recent months may make the idea of a longer mortgage term more appealing to some homeowners who are struggling with rising repayments amid the cost of living crisis.

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According to Moneyfactscompare.co.uk, across the market the average two-year fixed residential mortgage rate is currently 6.72 percent and the average five-year fix is 6.21 percent.

HSBC UK says it has observed an increase in customers selecting terms of 35 years over the past 18 months. The bank's 40-year mortgage 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.

HSBC UK has also increased the maximum term to 40 years for buy-to-let applications on both capital repayment and interest-only mortgages.

The bank's new mortgage