The soaring cost of living, rising house prices and higher mortgage rates have forced mortgage borrowers to take out ultra-long loans to afford their monthly repayments.

Average mortgage terms are generally around 25 years, but appetite for 35-year loans has grown as buyers have been forced to stretch themselves even further to get on the property ladder. However, borrowers risk spending tens of thousands of pounds more in interest if they choose a longer term.

The number of borrowers taking out loans with a 35-year term or longer surged to 196,182 in the first nine months of last year, up from 111,815 in 2020, according to a Freedom of Information request submitted by wealth manager Quilter to the Financial Conduct Authority, the City watchdog.

Experts said the number of people needing longer loans was increasing, as borrowers have grappled with the ongoing cost of living crisis and mortgage affordability tests.

Adrian Anderson, of mortgage broker Anderson Harris, said younger borrowers had been particularly keen to lock into 35-year mortgages, in a bid to afford rocketing house prices.

He said: “This is definitely a trend we expect to continue as the cost of living rises, banks tweak their affordability criteria and interest rates climb. Meanwhile house prices are still on the rise.

“The advantage of spreading the mortgage over a longer term is repayments put less of a strain on monthly cash flow. But borrowers must be aware that the longer the mortgage, the more interest paid over its term.”

Property values have defied predictions of a slowdown this year after months of double-digit growth. Average sale prices rose by 14.3pc in the year to March, according to mortgage lender Nationwide, the highest level in 18 years. The average UK home now costs £265,312, according to the building society.

Rising interest rates have prompted many borrowers to take out mortgages today, fearing higher rates in future. But experts said this could be a false economy if homeowners are forced to extend their term by a decade or more. 

The overall cost of a 35-year mortgage on an average £265,312 property is £369,217, based on a 2pc interest rate. However, the total cost for the same property falls to £337,421 if bought with a 25-year loan – a saving of more than £31,000.

One obstacle for homeowners seeking a long-term loan is that banks set a maximum age the borrower can repay the mortgage, generally up to 75 years old, meaning most lenders will only offer 35-year mortgages to buyers aged 40 or under.

Spikes in ultra-long mortgages being sold were recorded last year when the stamp duty holiday was drawing to a close, Quilter said. In June, the final month buyers could save up to £15,000 in tax, 35,046 loans were sold with a term of 35 years or more – a jump of more than 200pc on the number sold in the previous June. Likewise, sales rose 73pc year-on-year to 28,112 in the final month of the stamp duty holiday in September 2021.

Charlotte Nixon, of Quilter, said in many cases borrowers would have saved tens of thousands of pounds in interest had they waited until they could afford a shorter mortgage. She said: “Rushing to buy will not have resulted in the savings many believed they were securing, as they will now be faced with the cost of interest for the duration of a longer mortgage term.”

Yesterday, banks warned tax rises would limit what homeowners can borrow on a mortgage, as increased outgoings would need to be factored into mortgage affordability assessments. The rising cost of living will also restrict what banks are willing to lend.