Nobody wants to be paying off a mortgage in their twilight years – but the realities of modern life means a growing number face this prospect.
The average age of a first-time buyer is 35 years, according to research from Post Office Mortgages.
Given the average mortgage term is 25 years that means on average many borrowers will be paying their home loan into their sixties.
Alongside this, legislation means employers can no longer dictate the age their employees choose to retire.
The current average retirement age is 62 but new college graduates won’t be able to retire until age 75, according to a 2015 study from NerdWallet.
There are many different types of people who may need a mortgage into old age: someone looking to retire close to family and friends but in a more expensive part of the country, a divorcee starting out again or people returning from living overseas who want to buy a home rather than rent.
There are also people who will simply want to re-mortgage to reduce their monthly repayments.
Then, we hear a lot about the ‘Bank of Mum and Dad’ - parents and grandparents who want to draw on their equity by re-mortgaging to help family onto the housing ladder.
Charlie Blagbrough, mortgage policy officer of the Building Societies Association, says he has heard from one building society that since increasing their maximum age limit they have seen an increase in parents acting as guarantors for their children’s mortgages.
Mr Blagbrough says there are also aspirational reasons why people will want a mortgage in later life.
The most common reason is people wanting to adapt or redevelop their home, he notes.
Mr Blagbrough says: “There are some retired people who want to draw on their equity to fund a round-the-world holiday and are happy to do that by taking a small mortgage and repaying it from their pension.
“We’ve even heard of a couple of cases of people mortgaging their current home to fund a self-build – to develop their dream home to retire into.”