Government considers 50-year mortgages that could pass down generations

Ministers are considering the idea of ultra-long mortgages to tackle the housing crisis

Portrait of new homeowners admiring their investment
(Image credit: getty images)

Extra-long mortgages of up to 50 years on family homes that could be passed on from parents to their children are being considered by the government as part of plans to ease the housing crisis.

The idea could see people able to buy a home with little or no expectation of completing mortgage repayments during their lifetime; instead the property and outstanding debt would be passed on to their children. It could also allow people to buy a bigger home than they otherwise might be able to afford.

The most popular mortgage length among first-time buyers is around 30 to 35 years but a multi-generational approach could extend that by decades.

Setting out his plans last week to get more people on the property ladder, the prime minister confirmed the idea of ultra-long mortgages was being looked at: “Yes, certainly. We want to find all sorts of creative ways to help people into ownership.”

The government is already trying to increase home ownership with measures including extending the right-to-buy to housing association tenants and trying to increase access to 95% mortgages for buyers struggling to save for a large deposit

However, commentators warned ultra-long mortgages would not address problems of housing supply, affordability and could further drive up property prices.

UK house prices hit a new record high last month, with an average price tag of £271,613, according to Nationwide (opens in new tab) .

Are 50-year mortgages a good idea? 

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services (opens in new tab), said: “It is not the mortgage market that is preventing people from becoming homeowners; it is the cost of property in relation to people’s earnings. The issue isn’t to find ways to help people take on more debt, we need to find ways to build more houses, in the areas people want and need to live.”

Graham Taylor, managing director of mortgage firm Hudson Rose (opens in new tab), pointed to the idea’s complexities. “On the face of it, it seems like a great idea. But the loan would need to be affordable for all the original applicants and also the children who inherit it. Otherwise, the children could risk inheriting a liability they are unable to manage.”

Mortgages lasting 100 years have been issued in Japan but Rob Gill, managing director at Altura Mortgage Finance (opens in new tab), was sceptical about the idea in the UK. “A decade of ultra-low interest rates, followed by inter-generational mortgages have been a feature of the Japanese mortgage market since the mid-90s. Low interest rates boost property prices, long mortgage terms then keep them going as the only way first-time buyers can get on the ladder. It seems governments the world over will do anything to avoid the alternative of property prices actually falling.”

Other potential problems include the prospect of people paying mortgage payments into retirement and inheritance tax potentially being liable when the property is passed on to children.

Wondering how much you can borrow for a mortgage? Use our simple mortgage calculator to work out exactly how much you can get for a mortgage, depending on your annual income and the deposit you have.

Additional reporting by PA

Katie Binns
Katie Binns

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.