HSBC has announced it is extending its maximum term for borrowing from 35 to 40 years.

The criteria changes, which covers all lending types including purchase, remortgaging and additional borrowing, come into effect tomorrow.

Residential applications on capital repayment (cap rep) can apply for a maximum term of up to 40 years, while interest-only remains capped at 25-years.

Meanwhile buy-to-let applications for all repayment types (interest-only and cap rep), can also apply for a maximum term of up to 40 years.

Second homes will no longer be limited to 30 years and can now be considered up to 40 years.

John Charcol’s mortgage technical manager Nicholas Mendes says: “The latest criteria change from HSBC is reflective of the current market conditions.

“Lenders typically have two options to secure business – either through rate reductions or relax their criteria to take on extra business.

“By extending the term this will allow more mortgage holder to reduce the impact of higher rates on their mortgage payments which has extended to purchase, remortgages and those looking at additional borrowing.

“HSBC’s previous maximum term was 35 years – the latest move to 40 year bring them in line with the majority of the market and high street competitors”.