Consumers have begun to ask whether they can take out mortgages lasting 30 years or more, say concer...
Consumers have begun to ask whether they can take out mortgages lasting 30 years or more, say concerned advisers at a mortgage broker firm.
Andy Frankish, director at Mortgage Talk Direct - part of the Mortgage Talk national broker firm - says recent .media discussion about Japan's 50-year mortgage products has prompted to ask where they can get longer term mortgages - in some instances consumers are looking for mortgages of up to 40 years.
In particular, questions as to whether or not these non-existent "products" would be suitable are flowing from people looking to buy new properties which are still being built.
We're having to advise against and make comments on products which are not yet available, but the desire to invest is so great that if this longer-term option is available in the market, we are worried people will take them out regardless of the financial advice given," says Frankish.
'While I can understand that many first time buyers feel priced out of the market, if they take out one of these products, and interest rates go up as expected, the saving that they make will be marginal at best."
Frankish points out that the closest option to a longer-term mortgage is the Bank of Scotland's 30-year mortgage, yet take-up of the product is thought to be relatively low.
His other concern is that while there has been some talk of longer-term mortgages being used in Japan, consumers may not be aware the Japanese housing culture is very different, and many families all live in the same house - unlike the UK.
"We are concerned because we are having to make comparisons with Japan, where interest rates are incredibly low, the economy is in deflation and the living culture is very different.
"Here, it is estate agents and builders who are pushing property prices up, so if property prices continue to rise, first-time buyers, especially, are going to want these 40 year mortgages, regardless of the advice we offer. We always have to give best advice so I don't want to be put in a position where we have to recommend these products.
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