There has been a ‘significant’ rise in the number of people taking out mortgages with terms of 35 years or more, which is pushing the mortgage freedom age up for many homeowners.
This data comes from financial adviser Quilter, which put in a Freedom of Information (FOI) request to the Financial Conduct Authority (FCA).
It found, in the first nine months of 2024 alone, 22,103 mortgages with a term of 35 years or more were sold to people over 36.
And between 2019 to 2024 there has been a 156% increase in the number of older borrowers taking out longer-term loans, according to Quilter.
It has raised concerns those making mortgage repayments in their 70s may face problems with quality of life in retirement.
Quilter explained someone aged 36 taking out a £250,000 mortgage with a 35-year term at an interest rate of 4.75% could expect to pay a monthly repayment of £1,145.
Although this figure can change over the years in line with interest rates, Quilter explained borrowers taking out mortgages now would need to be confident they could make these kinds of repayments until they were 71 – three years after they qualified for the state pension and 14 years after they reach the normal minimum pension age.
Karen Noye, mortgage expert at Quilter said it reinforced the growing concerns about housing affordability, rising interest rates, and changing socio-economic trends.
“The data paints a striking picture of how financial pressures are reshaping homeownership,” she said.
“The continued rise in property prices has made it increasingly difficult for buyers, particularly those entering the market later in life, to afford homes without significantly extending the repayment term.
“At the same time, higher interest rates have pushed up monthly payments, prompting many borrowers to stretch their mortgages to 35 years in an effort to reduce these costs.
“Additionally, demographic and societal shifts mean that many people are purchasing their first homes much later in life. The average age of first-time buyers has steadily risen, reflecting the challenges of saving for deposits in a high-cost living environment. For older buyers, longer terms help ease affordability constraints but come with significant trade-offs.”
What to consider if you are taking out a longer-term mortgage
Noye explained the ramifications were ‘far-reaching’, with retirees on fixed incomes facing particular challenges.
Borrowers on these longer-term mortgages pay more in interest over the life of the loan, and this increases the overall cost of homeownership. Noye said this could erode their ability to save for retirement or meet other long-term financial goals.
There are also concerns a generation retiring with outstanding mortgage debt may place additional pressure on state support systems and the housing market itself. Some may be forced to downsize or sell properties to fund their later years.
But for those opting for a longer term, there are some things you can do to ease the financial pressure. For example, some mortgages allow borrowers to make overpayments, which could help to make repayments past retirement age more manageable, said Noye. Overpaying can also help to reduce the amount of interest paid by decreasing the overall term length.
“If you are considering committing to a mortgage for 35 years or more, it is important to seek professional financial advice where possible,” she added.
“A financial planner can help you find the best mortgage product for your circumstances and consider your finances in the round to ensure you have the flexibility to overpay should you wish to. At the same time, they can help you plan for a comfortable retirement with the finances available to afford your mortgage repayments.”
