Is opting for a 40-year mortgage term a good idea?

Bryony Clarke, 27, purchased her three-bedroom duplex in December 2023 for $309,375 with partner Charlie, 27.

They put down a 10% deposit of $30,938, and borrowed $278,438 from the bank.

Given the option of a 35- or 40-year mortgage term, they opted for the longer term to have money “in their pockets” as it reduced their monthly payment and enabled them to put money back into their home.

Repaying on a five-year fixed term of 4.6% with Nationwide, they have been paying $1,269 per month and managed to save $63 per month due to lower repayments — which would have been $1,335 per month on a 35-year mortgage.

They were able to redo the woodwork, carpets and fit a new boiler, spending $25,000.

After both receiving pay raises this year, the pair are overpaying by $125 a month, and Clarke says the earlier they pay off their mortgage “the better.”

Sharing information about her home online, she says offensive comments calling her “stupid” have left her “lost for words.”

Clarke, a content creator, from Leicester, Leicestershire, said: “We thought at the stage we’re in in our lives right now we’d rather sign up for a 40-year term with payments lower and have money in our pockets for now, just for the next couple of years or so.

“We thought we can always reduce the term down by making overpayments if we wanted to.

“I do remember sending my mom through the two mortgage offers and her immediately ringing me saying ‘40 years? That’s absolutely absurd can you not do a shorter one, it’s such a long time.'

“She had a little panic but as soon as I explained it she was very on board and understood.

“A lot of people online were assuming I had no idea how a mortgage worked.

“There were quite a lot of offensive comments telling me I was ‘stupid’ or ‘why don’t you understand this’ etcetera.

“When I sat down and did a video saying ‘this is how repaying a mortgage works' there were so many comments from people telling me it was really helpful and the way I’d explained it finally made sense to them.

“I think if we could retire in our 50s, even if it’s a month before our 60th birthday I think we’d both be really chuffed with ourselves”.

Clarke and Charlie first bought their home in December 2023 for $309,375 and were only given 35- or 40-year mortgage terms by their mortgage advisor.

She said: “It wasn’t really a difficult decision to choose between the two when looking at the actual amount we were paying per month it only worked out at $63 to $125 difference.

“I think times have changed so much from when our parents started to get on the ladder 20 or 30 years ago — it wasn’t a thing back then to take out a mortgage for a longer period of time."

While they have yet to decide if this will be their forever home, Clarke says if they decided to stay there forever they “absolutely could.”

She said: “Once our five-year fixed rate is up it might be worth investing in this property or buying something that’s got everything we would want and is ready to move into.

“We upped our repayments recently as we both got pay raises earlier this year so upped it to $1,394 per month”.

Sharing her mortgage and home content on TikTok, Clarke was “very shocked” at the comments she received after explaining her 40-year term.

She said: “I walked in, picked up my mortgage annual review letter and read it for a 30-second video and it got 50,000 views.

“It was not the reaction I was expecting.

“A lot of people were assuming I had not read my mortgage terms.

“Obviously I very much did understand that the first year of our mortgage we were paying off interest and as it trickled through the interest payment portion reduced and the principle increased”.

Clarke plans to “pay off the mortgage earlier” by overpaying monthly where they can and by reducing the mortgage term at renewal if they’re able to.

“I would love to retire early — how early it obviously depends on the situation,” she says.

“The earlier we pay off our mortgage and are totally mortgage free the better.

“I've also started making extra payments to my private pension as well as investing in a stocks and shares ISA which will hopefully work towards a pot of money that will allow us to retire earlier than whatever the standard age is when we reach it”.

Clarke’s mortgage:

• Total repaid so far: $34,841.81
• Total repaid towards their principal: $6,610.21
• Total left to pay: $271,827.29