Menu

Equity Release

More borrowers paying off mortgages into their seventies

More borrowers paying off mortgages into their seventies
Christina Hoghton
Written By:
Posted:
22/01/2025
Updated:
22/01/2025

There's been a significant rise in the number of people taking out mortgages with a term of 35 years or more, which will see them paying off their loans well into their 70s.

That’s according to Quilter which analysed data from the regulator after submitting a Freedom of Information request.

The weath manager found that, in the first nine months of 2024, 22,103 mortgages with a term of 35 years or more were sold to people aged over age 36, higher than any previous full year since 2018.

It added that, over a five-year period since 2019, there has been a 156% increase in the number of older borrowers taking out longer loan terms.

Since thoose taking out a mortgage for 35 years or more from the age of 36 will be at least 71 when it is fully repaid, there is a real risk that their monthly repayments could adversely affect their quality of life in retirement.

Crunching the numbers

According to Quilter, if a 36 year old takes out a £250,000 mortgage with a 35-year term at an interest rate matching the current Bank of England base rate of 4.75%, they could expect to pay a monthly repayment of £1,145.

Sponsored

Your Mortgage Awards 2024/25: winners revealed

Sponsored by Your Mortgage Awards

This figure may fluctuate with interest rates throughout their mortgage term, but they will need to be able to afford to make their repayments until the age of 71 –  three years after they can expect to qualify for the state pension.

Quilter added that the full state pension currently sits at £221.20 a week (2025/26 tax year), or £960 per month. While the state pension will of course increase over  a mortgage term, so will the cost of living. This makes it unlikely that the state pension alone will cover a mortgage repayment alongside everyday living costs, leaving people reliant on savings.

Karen Noye, mortgage expert at Quilter, 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.”

She continued: “The ramifications of this shift are far-reaching, especially as more people approach retirement age with mortgage debt still to repay. Retirees on fixed incomes may find it challenging to manage mortgage payments alongside other living costs, particularly if they have not accounted for this in their retirement planning.

“Furthermore, longer mortgage terms mean borrowers pay significantly more in interest over the life of the loan, increasing the overall cost of homeownership. For many, this could erode their ability to save for retirement or meet other long-term financial goals.”