Young property buyers are storing up serious problems for themselves in retirement by taking out 40-year mortgages, finance experts warn.

Many first-time buyers are now opting for long-term mortgages, more than 35 years, as a way to keep the monthly repayments down.

One in five

Around 19% of FTBs are going for loans with long pay back terms, up from just 8% two years ago, UK Finance says.

Now the banking trade body is warning that long-term mortgages can jeopardise pensions, the Daily Telegraph reports.

Unable to contribute

By allowing mortgage payments to continue for so long, young people may be unable to contribute to pensions, UK Finance says.

“The longer a customer needs to make mortgage payments, the less free income they may have over this period for other important considerations, not least contributions into their pensions,” it says.

The Household Finance Review from UK Fnance also flags up concerns about buyers being able to shorten the length of mortgages later in life.

Wait longer

Adrian Anderson, of broker Anderson Harris, told the Telegraph: “It [40-year mortgages] is a bit of a concern. The average age of people taking out a mortgage now is older than it used to be because people are having to wait longer to try and save to get on to the ladder.

“You could get to a stage where people are wanting to retire, but actually they’ve still got however many years left on their mortgage,” he said.

Some lenders have pulled high loan-to-value mortgages in the last week, which reduces the options open to FTBs.

‘Mortgage crisis will drive more buyers to choose 35-year loans’ – expert