Remortgage Over 35 Years

The Cost-of-Living Squeeze and Extended Terms

From 2022 onwards, the Bank of England raised the base rate from near-zero to 5.25% — its highest level in over 15 years — in response to elevated inflation. For existing mortgage holders, this meant significantly higher monthly payments when their fixed rates expired. Many turned to extended terms as a way to manage the payment shock.

A borrower who fixed at 1.5% in 2021 and came off to a market rate of 5% in 2024 faced a near doubling of monthly payments. Extending from 22 remaining years to 35 years could bring the payment back to a manageable level. This is a legitimate use of a longer term, provided the borrower understands the long-term cost and has a plan to reduce the term when their financial position improves.

The FCA has expressed concern that many borrowers extending to 35 years will not subsequently reduce their term — either because their finances do not improve as expected, or because they prioritise other spending over mortgage overpayments. The regulator has urged lenders to ensure extended-term borrowers genuinely understand the full cost implications.

The 2022–2024 period also saw a significant increase in first-time buyers taking 35-year mortgages simply to pass affordability stress tests. In high-cost areas such as London and the South East, a 35-year term can be the only way for average earners to purchase a property at all. This structural issue in the UK housing market is a broader problem that extended mortgage terms only partially address.

True Financial Cost: 35 Years vs 25 Years

On £200,000 at 4.5%: a 25-year term costs £1,111 per month and £133,300 in total interest. A 35-year term costs approximately £963 per month and £203,400 in total interest. The £70,100 additional interest comes in exchange for saving £148 per month — a saving that, over 35 years, totals just £62,160. In pure cash terms, the 35-year borrower pays more in total despite paying less each month.

The comparison becomes even more unfavourable when you consider that the 25-year borrower is mortgage-free a full decade before the 35-year borrower. During those additional 10 years, the 35-year borrower is still paying £963 per month — a total of £115,560 — while the 25-year borrower has been debt-free and saving or investing that money.

Lenders are required to disclose the total amount payable over the term. Borrowers who see that a 35-year mortgage on £200,000 at 4.5% will cost over £403,400 in total repayments — more than twice the original loan — sometimes reconsider their term choice.

FCA Concerns and the Retirement Risk

The FCA has consistently raised concerns about extended mortgage terms and their implications for retirement. A 40-year-old taking a 35-year mortgage would not be mortgage-free until 75. If that borrower retires at 65 and their income drops significantly, they may struggle to maintain mortgage payments for the final 10 years of the term — potentially facing repossession or being forced to sell their home.

Under FCA rules, lenders are required to assess whether a mortgage is affordable throughout its term, including in retirement. In practice, lenders take varying approaches to retirement income assessment. Some require a retirement income projection; others rely on the borrower to disclose expected pension income, which lenders then factor into affordability calculations.

The FCA's Consumer Duty requirements — which came into force in 2023 — place an obligation on lenders and brokers to ensure that mortgage products are genuinely suitable for the borrower's needs. A 35-year term that results in a borrower carrying mortgage debt into retirement without adequate retirement income to sustain payments may not meet this standard.

Borrowers considering a 35-year term should think carefully about how they will manage mortgage payments after retirement. If pension income will not be sufficient to cover payments, a plan to either overpay substantially before retirement or downsize the property should be in place before proceeding.

When a 35-Year Term May Be Justified

A 35-year term is most justifiable for younger borrowers — say those in their early 30s — for whom a 35-year mortgage ends by their late 60s, within most lenders's maximum age limits and before retirement for most people. For these borrowers, a 35-year term may be the most affordable way to enter homeownership in a high-cost market, with the expectation that income growth will allow them to overpay or remortgage to a shorter term in future.

It may also be appropriate for borrowers facing a temporary but severe financial squeeze — for example, following a significant drop in income — as a short-term measure to prevent payment default, with a clear commitment to revert to a shorter term at the next remortgage once circumstances improve.

Specialist lenders, including some building societies and retirement interest-only lenders, may also offer extended terms with specific features designed to manage the retirement risk — such as a switch to interest-only in retirement or equity release provisions. These products require careful consideration and specialist advice.

In all cases, the decision to take a 35-year term should be made with full awareness of the total cost, a realistic assessment of retirement income, and a clear plan — whether that involves overpayment, term reduction, or planned downsizing — for how the mortgage will ultimately be repaid.