5 ways to manage a “marathon mortgage” effectively

Comparing mortgage deals can be a challenging decision, particularly when faced with the range of options available.

Longer mortgage terms of 35-plus years, often referred to as “marathon mortgages”, are becoming increasingly popular.

“In the past when people were purchasing a house but weren’t really sure on their budget, they usually went with a 25-year mortgage. However, more people are now going for 30 and 35-year mortgages, and now most lenders will let people do a mortgage term up to 40 years,” says Connor Harle, senior mortgage expert at Mojo Mortgages.

One of the main attractions of a marathon mortgage is the ability to spread repayments over a longer period, helping to reduce the amount borrowers pay each month.

“I think people are looking for that safety net of not having to stick to a higher monthly mortgage payment to give themselves some breathing space because costs are rising in lots of other areas of life,” explains Harle.

Whether you already have a marathon mortgage or are thinking about taking one out, here are Harle’s top tips to keep in mind…

1. Work out a realistic budget

Before signing off on a mortgage, you’ve got to make sure that the monthly payments fit comfortably within your household budget.

“A lender’s affordability calculator might say that you can afford a particular mortgage, but you’ve got to think about if you would still feel comfortable if an extra 1% or 2% was added on,” advises Harle.

“You need to work within a reasonable budget from the start because if you do push yourself too much, which a lot of people did when interest rates were at an all-time low, it can haunt your budget later on.”

Harle recommends giving yourself a buffer so you don’t feel stressed or financially strained at the end of every month.

“Find a reasonable figure where you’re not feeling like you’re at the top end of your budget each month,” recommends Harle.

He also regularly reminds clients that some months will be more expensive than others.

“One month you might have an MOT, the next month you might have a holiday, but the following month you might be left with a surplus of cash,” says Harle.

“Think about if a marathon mortgage is suitable for you and your circumstances.”

2. Utilise overpayment allowances

Channelling monthly surplus funds into an extra mortgage payment could help you save thousands in interest and shorten your loan term.

“When you make a mortgage overpayment, it goes directly off the capital. Standard lenders usually offer a 10% overpayment facility, but there are some lenders out there that let you do up to 20%,” says Harle.

So, it’s important to check your mortgage terms for annual overpayment allowances.

You might want to consider mortgage overpayments if you come into an inheritance or have a commission-based job.

“If you work in a commission or bonus-based job, budget your basic needs first and then assess your bonus or commissions when they come in and think about how much you could put towards your mortgage,” advises Harle.

3. Reduce or avoid big hire purchases or high-interest debts 

“A lot of debt build-up doesn’t help. If you’ve got big hire purchases on a monthly basis or a big lease, that’s a constant bill that you will have pay alongside a mortgage,” says Harle.

So, avoiding something like an expensive car lease could help you pay off your mortgage quicker.

“If you are paying £300 a month towards a hire purchase, that’s £3,600 year. Over 10 years that could turn into £36,000 and if that went towards paying off your mortgage instead that could make a really big difference,” says Harle.

“High debts can really squeeze your budget and means that you probably won’t have the funds to make any mortgage overpayments because you’ve got these other debts that are pushing you.”

4. Adjust your mortgage term if your situation changes

A marathon mortgage is rarely static. Most borrowers adjust their terms multiple times over the course of the loan as their income, household needs, and career stages evolve.

“First-time buyers don’t tend to be able to cough up big deposits nowadays, so having a lower monthly mortgage payment can act as a bit of a cushion for them,” says Harle.

However, you can contact your lender and review your contract if you come into extra money. 

“As you get older wages tend to grow and money tends to comes in from other avenues later in life, such as inheritance and pensions, and you might be in a better situation to shave some years off your mortgage term,” says Harle.

5. Make sure you have plans in place for retirement

“You want to plan for retirement ahead of time,” recommends Harle. “Ideally you want to be going into this wind-down period without having a big mortgage putting pressure on bills.

“If you don’t have plans in place, and you are in your 60s and still have 15 years left to go on your mortgage, then you might be a situation where you are worrying about having to work beyond your retirement age.

“So, it’s really important to have a plan in place, whether that’s inheritance or downsizing, so that you can hopefully eventually become mortgage free and enjoy retirement.”