Fast-rising house prices are forcing home buyers to stretch their mortgage terms up to 40 years to get a foothold on the property ladder, raising fears of a return to the risky lending practices common before the financial crisis.

One in five borrowers are looking to spread their repayments over 30 years or more, compared with one in 12 a year ago, according to the Mortgage Advice Bureau. Most demand comes from first-time buyers, who are opting for longer-term repayments to cut costs, but face paying much larger interest over the longer term.

A typical £150,000 mortgage costs £711 a month if the buyer opts for the traditional 25-year period, but falls to £537 a month if it is stretched to 40 years. But the interest cost soars from £63,000 to £108,000.

Harriet Allard, 27, will be 66 before she has paid off the mortgage she has taken out from Halifax to buy a £119,000 one-bed flat in Bournemouth. “I fell in love with the flat and was initially looking to borrow over 35 years, but the only way I could get a mortgage was to agree to a 40-year term. Otherwise, the lenders said I couldn’t afford my mortgage repayments.”

House prices rose 8.6% over the past year to an average of £202,859, Halifax said this week, although they dipped in September.

Allard says she is not daunted by the idea of paying a mortgage for 40 years. “My broker wasn’t sure how I was going to take it, but I just accepted it. Yes, the thought of paying it until I’m 66 is scary, but I try not to think about it,” she said. “The flat has already gone up £10,000 in value. It makes more sense to me to have extra money each month now, rather than in 20 years’ time. I’d rather have a life and be able to go travelling than be a slave to my mortgage payments. I live in the now.”

The Council of Mortgage Lenders said the proportion of borrowers taking out loans in excess of 25 years had doubled in the past five years, to about a third of all mortgages. After the credit crunch, cheap “interest-only” mortgages were in effect banned by regulators, so mortgage brokers have instead advised buyers to stretch their repayment terms.

“A standard 25-year mortgage term would make it almost impossible for many first-time buyers to get on the property ladder,” Aaron Strutt, of brokers Trinity Financial, said.

The Bank of England said it was monitoring the rise in longer-term mortgages, and its new “macro prudential” powers could allow it to intervene if necessary. When the Bank’s governor, Mark Carney, was in charge of the Bank of Canada he twice took steps to cut the maximum amortisation period of mortgages, first from 40 years to 35, then to 30, to dampen the housing market. He told the Canadian House of Commons: “If everyone has a 40-year amortisation mortgage, then you just have higher housing prices.”

Claire and Stephen Rickard with their baby Jessica. The family has just moved into their new home with a 35-year mortgage. Photograph: Graham Turner for the Guardian

Last week, Claire and Stephen Rickard, both 28, from Orpington in Kent, extended their Nationwide mortgage term from 20 to 35 years and moved from their £310,000 two-bed terrace to a £480,000 four-bed detached house just down the road.

Claire said: “I did an accounting degree so I knew the only way we could afford to buy it was if we extended our term to 35 years. The lady I spoke to at Nationwide didn’t query it when I said a 35-year term was what I wanted – it seemed like something she heard everyday. I don’t know how much extra we’ll end up paying in interest by the end of the term. I didn’t look into that. It seems a long way off. If we’d borrowed a 25-year mortgage, we would have struggled and had to change our lifestyle. Thanks to the 35-year mortgage, we can carry on living as we were.”

James Abbott, 37, from Portishead in Somerset, will be 70 before his 35-year mortgage is paid. “My wife Karen was expecting our twin boys Oliver and Ethan, and we wanted to extend our house so we’d have more space when they arrived,” James said. “By stretching our term, we managed to borrow an extra £10,000 to pay for the building work and still reduced our monthly repayments by a third, to £600 a month.”



James and Karen Abbott at home in Portishead with their twins Ethan and Oliver. Photograph: Adrian Sherratt for the Guardian

He was not aware that 35-year mortgages existed until his cousin Simon Kelly, a mortgage broker, suggested it. “The maximum term our lender, Virgin Money, would agree to was 35 years. I was even surprised when they agreed to that, because I was 35 at the time. But I suppose I do have a guaranteed pension, thanks to my job. And I’ll probably still be working at 70, if the government gets its way.”

Mortgage brokers say the big lenders have become very relaxed about offering 35- to 40-year mortgage deals. “It is surprising how many lenders are offering 40-year terms to make their mortgages more attractive to first-time buyers,” Strutt said.

“We’ve arranged 40-year mortgage terms for clients in their 20s through Halifax and Nationwide, although it is more common for borrowers to take 30- or 35-year terms. Halifax and Nationwide are certainly two of the most generous lenders.”