Affordable housing mortgages now run to 40 years

Key takeaways

Pepper Money increased the maximum term across its affordable housing schemes from 35 to 40 years.
The change covers Shared Ownership, Right to Buy, Help to Buy remortgages, Help to Buy Wales and First Homes.
Family Building Society’s updated affordability model could increase some borrowing amounts, including from £155,000 to £180,000.

First-time buyers and other eligible borrowers using affordable housing schemes could receive more flexibility over monthly mortgage payments after Pepper Money extended the maximum term to 40 years (Mortgage Solutions). The lender said the change gives brokers another option for borrowers managing monthly repayments alongside wider household costs.

What changes for eligible affordable housing borrowers?

Pepper Money increased the maximum mortgage term across its affordable housing schemes from 35 to 40 years. The new maximum applies to Shared Ownership, Right to Buy, Help to Buy remortgages, Help to Buy Wales and First Homes.

The change gives first-time buyers and other eligible borrowers greater flexibility in managing monthly repayments. It also brings the maximum term across Pepper Money’s affordable housing range in line with the lender’s standard residential proposition.

Applicants must still meet Pepper Money’s usual affordability, credit and lending requirements. The longer term therefore does not automatically make every borrower eligible for the product.

How does a 40-year term affect repayments?

A longer mortgage term can reduce monthly payments, but borrowers may pay more interest over the life of the loan. Pepper Money director of sales Paul Adams said brokers should consider that trade-off when helping eligible customers balance mortgage payments with other household costs.

The same announcement was reported by Mortgage Strategy. The lender said the longer term would not suit everyone, making it important for borrowers to understand the difference between a lower monthly payment and a potentially higher total cost.

For buyers reviewing the numbers, the site’s Mortgage Calculator for Property Abroad can help place monthly repayments and total borrowing costs in context. The update is relevant to borrowers comparing different terms rather than to buyers deciding how much they can afford solely by applying for a longer loan.

Could Family Building Society borrowers receive larger loans?

Family Building Society has updated its affordability assessment to boost borrowing power. The enhanced model could support larger loans depending on the interest rate selected, the term, income and existing commitments.

The report gave two examples of how borrowing capacity could change. A borrower who previously qualified for a £295,000 loan could access up to £342,000, while someone seeking to borrow £155,000 could see that increase to £180,000.

Family Building Society head of intermediary sales Darren Deacon called the change a significant enhancement to its affordability offering. He said it could support more customers with greater borrowing capacity where their circumstances allowed. For some borrowers, he said, the update could mean access to tens of thousands of pounds in additional borrowing while continuing to meet affordability responsibilities.

Family Building Society’s approach also combines flexible lending criteria with manual underwriting. The lender said the update could help more customers buy a home, move to a larger property or adapt to changing family circumstances where their needs do not fit a standard lending model.

The maximum Pepper Money affordable housing mortgage term is now 40 years.
The previous maximum across the relevant affordable housing schemes was 35 years.
Family Building Society’s example borrowing amounts range from £155,000 to £342,000 after the affordability update.

What should borrowers compare before choosing?

The two changes offer different forms of flexibility. Pepper Money is changing the maximum duration of selected mortgage products, while Family Building Society is changing how it assesses the amount some borrowers may be able to borrow.

The practical comparison is between monthly repayments and total cost. The term extension may reduce the monthly amount in a way that helps some applicants fit the payment to their budget.

Neither update removes the need to check product criteria or affordability, and Adams said advice is essential for understanding the trade-off between lower monthly repayments and a potentially higher total cost over the life of the mortgage.