One in three will still be paying mortgage as they approach retirement

By

Adam Uren

|

A third of homeowners with mortgages will be approaching or even past their retirement age by the time they pay off their home loans, a study has found.

Just under 32 per cent of homeowners are on mortgages that won’t be fully paid off until they’re at least 61-years-old, while almost one in 20 will still be paying their mortgage past 70.

The Ocean Finance study highlights how many people will have mortgages still to clear while drawing their pension, or will have to prolong their working lives, unless they can increase their repayments to pay their loans off earlier.

Exiting now: But will you still be paying off your mortgage in retirement?

On average, Britons will pay off their repayment mortgages between 51 and 60-years-old.

Ian Williams, of Ocean, said: ‘It’s great that most people will have repaid their mortgage before they retire, but the fact that nearly one in three mortgage customers will still be repaying once they’re aged over 61 is worrying.

‘Not long ago, most homeowners would have paid off their mortgage by the time they reached their 50s and so could enjoy living a few years mortgage-free before they retired, or even choose to retire early.

‘But, as the average age of first-time buyers continues to rise, millions are now in a situation where they won’t have finished repaying their home loan until they’re about to retire.

‘For those that can afford to do so – and where the provider allows it – overpaying the mortgage each month can knock years off the term of your mortgage, which could help ensure it’s cleared well before your planned retirement date.’

While some are able to pay off their mortgages by their mid-60s and still have enough to see them through retirement, others end up looking to other forms of credit to pay off their home loans.

Analysis by equity release provider Stonehaven found that 40 per cent of the lifetime mortgages it sells – which are paid back, with interest, when a home is sold upon the owner’s death – were used to clear existing mortgage debt.

Unlocking the equity in property is seen as an attractive option particularly to those on interest-only mortgages, and have reached the end of their term unable to pay off their initial loan.

But it is also viewed warily among many homeowners who want to protect the value of their homes, not least for inheritance purposes, although there are products available that allow you to pay off the interest as you go.

Georgina Smith, of Stonehaven, said: ‘Flexible products mean that the borrowing and payment options can be tailored a lot more to suit specific needs and circumstances – offering lump sum payments to do the things you always wanted to do, or using it to top-up income in retirement and relieve financial pressures.’

The Ocean study found that mortgage customers in the East Midlands are most likely to still be paying off the debt when they are over 61, while those in the South West are most likely to have paid off the entire debt.

Comments (43)

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Kilo Charlie,

My World, Bermuda,

1 hour ago

You struggle to buy your own home, you hope you don’t lose your job if you’ve got one, and when you retire you’re still going to have to worry about paying your mortgage. Lots to look forward to then.

Graham,

London, United Kingdom,

1 hour ago

Maybe, but how many have moved upmarket into houses they did not really need or re-mortgaged to pay for expensive holidays etc?

Nicholas Clode,

Wells, United Kingdom,

1 hour ago

Bit of a dud article this. People live eight years longer than just 20 years ago. Kids leave school at 21 instead of 16. People have children at 30 instead of 26, they marry later, they buy homes later and they are destined to retire at 70 instead of 65. Not news.

BrokenBritain,

Leeds,

2 hours ago

and just after you’ve paid it all off you drop dead and the taxman takes half of it. What exactly is the point? Cavemen had it better, at least they didn’t have to work themselves to death for nothing.

Cringeworthy,

Leicester, United Kingdom,

2 hours ago

“One in three homeowners will still be paying mortgage as they approach retirement” Does not make sense. If they owned the property, they wouldn’t have a mortgage. It’s one in three BORROWERS.

Norvik,

Essex, United Kingdom,

2 hours ago

People with a mortgage are home buyers ! They do not become home owners until the mortgage is finished !

Deadpool,

Bristol, United Kingdom,

2 hours ago

Maybe if everyone with an endowment wasn’t ripped of by the financial companies, then their mortgage would have been paid off. I know mine would have. 25K instead of 49K.

NickO,

Rochester, United Kingdom,

2 hours ago

I am hopeful to have paid off my mortgage by the time I retire but the government keep changing the NRD so realistically I’ll be dead .. my wife will have a nice house to live in and then leave the lot to Dogs Trust

Aggrieved pensioner,

Manchester,

2 hours ago

Well they have been going through a hard five years of interest rates, maybe they’ll be given a break in the budget.

Tom Sharp,

Manchester,

2 hours ago

I expect it will take two or even three generations before many houses will be paid for. ie the grandchild, or grandchildren of the person who paid the deposit! I’m sure this is common in Holland and Germany!

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One in three will still be paying mortgage as they approach retirement