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Fancy fixing your mortgage rate for 40 years? Don’t forget about your pension

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23/11/2021
Super-long mortgages are becoming more popular but, if you need to make monthly repayments beyond retirement, you're going to need a bigger pension
Fancy fixing your mortgage rate for 40 years? Don’t forget about your pension

Kensington Mortgages has launched a long-term fixed rate mortgage range in partnership with Rothesay, with borrowers able to fix their mortgage rate for up to 40 years.

The Flexi Fixed for Term range lets borrowers fix the rate paid on their mortgage for their loan term, which can be between 11 and 40 years.

Rates start from 2.83% at 60 per cent LTV for a 15-year term and go up to 3.34% on a 40-year term.

Rise of the long-term fixed rates

The new long-term fixed mortgage is one of a raft of super-long fixed deals launched recently.

The number of mortgages with 40-year terms available is now 146, according to Moneyfacts.

However, interactive investor is warning homeowners, including first time buyers in their mid-thirties who are considering long mortgage terms, to seriously consider the implications for their retirement plans.

The investment platform said they might have to contribute significantly more into their pensions to cover their mortgage repayments after they retire, or be prepared to work for longer.

It added that ill health and other life events prevent people working for longer, even if that’s their intention. This could put those with mortgages in later life at risk of not being able to continue to meet their repayments in old age.

Becky O’Connor, head of pensions and savings at interactive investor, said: “The rise of mortgages with ultra-long terms that stretch way past retirement age is worrying. It requires a fundamental rethink of what people will need in retirement and could require a change to the assumptions that underpin current guidance for pension savers on how much they should aim to have in their pot.

“If you are considering paying a mortgage into retirement, there’s a huge reality check coming: you will need a much bigger pension than most people are currently on track for to finance this additional borrowing.”

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