50 Year Mortgage
50 Year Mortgage....Huh?
So what’s the deal?
Here’s what UBS says would happen if you stretch a standard 30-year mortgage out to 50 years:
Your monthly payment drops. Yes, you’ll pay less each month. Example: A $415,000 home at average interest might cost you around $2,098/month for a 30-year loan. Stretch that to 50 years and maybe that payment falls to around $1,998/month.
But… you’ll end up paying a lot more total interest. UBS estimates that under a 50-year term you could pay interest equal to about 225% of the home’s price — which is more than double what you’d pay with a 30-year term.
Equity builds painfully slow. With a 50-year mortgage you might bail out of only ~4% of the principal after ten years, and ~11% after twenty years. Meanwhile a 30-year mortgage gets you much further in that time.
Why this matters for retirees (and soon to be retirees)
You and me? We’re thinking long game. We’re hitting retirement, maybe downsizing, maybe relocating, trying to own our homes — not still paying them when we’re in our 70s. So this 50-year mortgage idea raises some red flags:
If you’re 40 when you buy the home, and you go 50 years, you’re 90 before you pay it off. Might be too much of “still owing” when you should be relaxing.
A lower monthly payment sounds nice, but paying more interest means less money that could’ve gone into travel, hobbies, or enjoying retirement life.
Slower equity growth = less flexibility down the road. What if you want to move, or need money? You’ll have less cushion.
When the goal is quality of life in retirement — fewer headaches, more freedom — tying yourself to decades of debt doesn’t exactly scream freedom.
My two cents
And here is the part nobody in the ivory tower wants to talk about. The national median homeowner tenure is about 11.9 years. Let that sink in. Most people are out of their house in under twelve years. So who exactly is settling in for a 50 year mortgage? What is this, a lifetime achievement award for debt?
And if you are 65 years old, are they really going to hand you a 50 year mortgage with a straight face? What are they expecting here? That you are going to be out back mowing the lawn at 112 like some kind of Highlander? Come on. The bank will smile, nod, run the numbers, then quietly think, “Yeah, buddy, we will see how this plays out.”
It is the perfect example of a product that looks good on a spreadsheet and makes absolutely zero sense in the real world where people, you know, actually live.
Bottom line
If you’re looking at home ownership on your retirement roadmap:
A 50-year mortgage might lower your payment now, but you pay for it later.
The math says you’ll pay way more interest and build way less equity, which affects your retirement flexibility.
If you can swing a standard 30-year (or shorter) term, you’ll likely end up in a better place when you want to retire and enjoy life.
And above all: owning your home outright, or close to it, = piece of mind. That’s the game.
Stay sharp. Keep the power. And don’t let “lower payments” trick you into “longer debt.”
#RetirementLifeUSA
