Millions of homeowners expect to be paying of their mortgage into retirement and will be forced to work past 65 to afford the repayments, a study has revealed.
Analysis by online mortgage broker L&C also uncovered worrying evidence the majority of those expecting to pay their mortgage beyond their 65th birthday had no plans for how they would pay it off.
And those who thought they would eventually be mortgage free feared they would be older than expected by the time they cleared their debt.
According to L&C, the research paints a ‘worrying picture’ for those who will be borrowing into later life, with one in ten of the over 55s questioned admitting they didn’t think they would ever be mortgage free.
In fact, if the survey results were representative of the nation as a whole, it would suggest three million people would still be paying off their mortgage beyond the age of 65.
It’s a sign, said L&C, the mortgage market had changed and people were facing the reality of having a mortgage for longer.
Affordability issues
David Hollingworth of L&C described the outcome of its research as ‘a concern’. He said many would experience a dip in their income after retirement which could then pose affordability issues for older borrowers.
He said: “Although homeowners will, and should, continue to aspire to pay off their mortgage before retirement, the reality for many could mean having a mortgage for longer.”
Why is it taking longer?
Hollingworth said one of the reasons more people were expecting to take longer to pay off their mortgage was because more of us are living and working for longer and, in many cases, taking the first step onto the property ladder later in life.
When that is combined with high house prices, and therefore bigger mortgages, it adds to the likelihood of carrying mortgage debt into later life.
However, the survey also revealed the cost of financially supporting families was creating a barrier to paying off mortgages. Over a quarter of those L&C surveyed said they were putting their family first.
Hollingworth added: “It’s clear that homeowners will shift their priorities depending on family needs. For example, so many first-time buyers are reliant on the Bank of Mum and Dad.
“However, there still needs to be a clear focus on the repayment of the mortgage, to avoid reaching a point that could force the sale of the family home.”
