‘Marathon Mortgages’ are on the rise and it’s incredibly concerning.
A marathon mortgage is a mortgage with a term of 35 to 40 years (which is significantly more than your typical 25-year term).
Analysis from Experian shows that 25% of new homebuyers aged 29 and under opted for a marathon mortgage in the first quarter of this year. They chose this option to secure lower initial monthly payments due to the current cost of living crisis.
However, there are some big issues with this.
Marathon Mortgages Will Cost More Overall
Taking out a marathon mortgage will reduce your initial monthly repayments but will cost you significantly more in the long run.
Let’s illustrate this by looking at the difference for a £200k mortgage assuming a fixed interest-rate of 5%.
| Term | 25 years | 40 years |
| Initial monthly repayment | £1,169 | £964 |
| Total interest payable | £150,754 | £262,908 |
| Total repaid | £350,754 | £462,908 |
As you can see from the example above, whilst the initial monthly repayment for a 40 year term is lower, the difference in total interest payable is a staggering £112,154.
Opting for 40 years means you would pay back over double what you initially borrowed!
Marathon Mortgages Can Trap You In Debt In Your Retirement
Taking out a marathon mortgage increases the likelihood that you would still be paying off your mortgage into your retirement years potentially affecting your ability to retire as early as you’d like.
A 30 year-old who takes out a mortgage with a 40-year term could be paying off the loan until they’re 70. This may mean that you’ll have to continue working, sell the property or find an alternative way to pay it off.
Building Equity Takes Longer with Marathon Mortgages
This makes you more vulnerable to falling house prices (like they are right now) and increases the risk of negative equity. I wrote a separate post on negative equity which was featured by LinkedIn News that you can read below but spoiler alert, this is bad).
This highlights the depravity of our current economic system that forces consumers into more and more debt which is a terrible recipe for a healthy economy.
Rather than resigning the next generation to mortgages spanning their working lives, we need to address the underlying issue: interest-based lending. There’s a reason why it was banned by Judaism, Christianity and Islam.
Interest disproportionately redistributes money to those who already have capital perpetually worsening inequality, while also fuelling asset price bubbles like we’ve seen in the housing market (remember 2008?).
It’s not just marathon mortgages that are the problem; they’re simply the latest version of a flawed product. It’s the very concept of a mortgage (which literally means “dead pledge” in Latin) that needs to be binned.
It’s time to discard this outdated model and push for a fairer approach to financing—a topic I’ll delve into in future posts.
Subscribe to make sure you don’t miss out!
Adil Hussain 
Leave a comment