One in six expect to be paying their mortgage at 65

Almost one in six people expect to be over the age of 65 by the time they repay their mortgage (15%) according to research by Opinium.

The research shows that among those who were aged 55 and over and still had a mortgage, one in five expected to repay over the age of 70 (19%), and 5% said they’d never be able to repay their mortgage whilst the number of people who don’t know when they’ll be able to pay off their mortgage has risen every year, from 9% in 2019 to 11% in 2020 and 16% in 2021.

The average age we expect to repay the mortgage is 59 and of those who were already retired, 74% owned outright and 6% still had a mortgage.

Commenting onf the figures 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.”

“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.”

“Given the enormous cost of property, and the uncertainty in life, it’s not a huge surprise it’s taking longer to repay the debt. Even if you snap up a property at the average age of 30, and take out a 25-year mortgage, it only takes the odd life hiccup to push payments into your 60s. If you end up dipping into your property equity, or face divorce, you can push your final repayment date back beyond retirement.”

“The number of people who have lost touch with when they might be able to repay the mortgage is also on the rise. This owes something to the fact that mortgage terms are increasing, so borrowers aren’t counting down the days. Increasing uncertainties in life also mean we don’t always know whether we’ll need to borrow more as we go along. Some of this will have been exacerbated by the pandemic. However, we need to keep on top of when the mortgage is due to be repaid, so we can build our broader financial plans around it.”

“Higher property prices mean we take longer to save a big enough deposit, and longer to earn enough to qualify for a mortgage. 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 period. We’ve seen the growth of the 35-year mortgage.
More people in higher education means we’re starting work later, and already carrying debts, which pushes a purchase even further down the line.
More complicated personal lives means more divorce. Of those marrying since the 1990s, a quarter were divorced by their 10th anniversary. The average age to get divorced is 45, and starting again at this stage often means taking on a new mortgage.”