• A 40-year term mortgage is more expensive than other mortgage options.money image by Bradlee Mauer from Fotolia.com
  
  When borrowers think of a mortgage, they tend to think of a long-term debt that ranges from 15 to 30 years. However, in the mid 2000s a new type of mortgage hit the market that allowed borrowers to amortize their mortgage debt over a 40-year term. While this gives the borrower a slightly smaller monthly payment than the 30-year term option, it can have several disadvantages over shorter-term options.
  
  

Longer Term

• A 40-year mortgage allows a borrower to pay back his debt over the span of 40 years, which is 10 years longer than the traditional 30-year mortgage option. This means that it takes the borrower 10 years longer to pay off the mortgage in full and own the property free and clear. Also, it may mean that the debt may outlive the borrower in many cases.
  
  

More Interest

• The interest rate on a 40-year mortgage is typically the same or slightly higher than that of a traditional 30-year mortgage. However, the amount of interest paid over the life of the debt is significantly higher. For example, if a borrower has a $100,000 mortgage at 5 percent interest, he pays $93,255.78 in interest on a 30-year mortgage. If he borrows the same amount at the same rate over a 40-year term, he pays $131,454.37 in interest. The 30-year option saves him $38,198.59 over the life of the debt.
  
  

Equity Issues

• If a borrower procures a 40-year mortgage, it takes him significantly longer to earn the same amount of equity as it would have if he chose the 30-year option. In the first few years of a mortgage debt, a majority of the payment goes to interest and a small amount goes to reduce the principal. The principal reduction payment is even smaller for a 40-year debt, due to the lower monthly payment, taking the borrower longer to accrue additional equity in the property.