One in six set to be paying mortgage beyond 65
Almost one in six people expect to be over the age of 65 by the time they repay their mortgage (15%), according to Hargreaves Lansdown.
The average age we expect to repay our mortgage is 59 but increasing numbers of older people are still paying into retirement.
The financial adviser added that, among those who were aged 55 and over and still had a mortgage, one in five expected to still be repaying it beyond the age of 70 (19%).
Worryingly, 5% said they’d never be able to repay their mortgage.
Why are we paying for longer?
Higher property prices mean we take longer to save a big enough deposit, and longer to earn enough to qualify for a mortgage, said Hargreaves Lansdown.
It’s one reason why the average age of a first-time buyer is 30.
In order to boost affordability, buyers are taking on longer mortgages to spread repayments over a longer periods, and there’s been an increase in borrowers taking on a 35-year mortgage.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “One in six people will still be paying the mortgage in retirement. On the one hand, this is relatively good news, because mortgage holidays during the pandemic haven’t significantly shifted the timing of when we plan to have paid off the mortgage.
“On the other hand, this still means millions of people will face a major debt burden in older age.”
She continued: “The fact that 2.9 million people took mortgage holidays during the crisis hasn’t significantly moved the dial. This is likely to be because when payments restarted, mortgage companies tended to increase monthly payments instead of extending the mortgage as a default, and it seems borrowers have accepted these bigger bills rather than paying their mortgage for longer.
“But although on average we plan to pay off the mortgage by the age of 59, a significant minority still expect to be paying a home loan in retirement. Right now, 6% of retired people are still facing monthly mortgage bills. If you’re still carrying the burden of your mortgage into retirement, there’s a risk it’ll drain the life out of your golden years.”