ResidentialSep 22 2020

More borrowers to repay mortgage after age 65

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More borrowers to repay mortgage after age 65
Credit: Jason Alden/Bloomberg
ByChloe Cheung

The number of people who expect to repay their mortgage after the age of 65 has risen, according to Hargreaves Lansdown.

An April survey by the platform found 18 per cent of people expect to be over the age of 65 when they pay off their mortgage, compared with 11 per cent last year.

One in five mortgage borrowers who were aged 55 and over said they expected to repay the loan in their 70s, while 5 per cent said they would never be able to repay.

The survey, conducted among a nationally representative sample of 2,000 people, also found the age of 60 to be the average at which people expected to repay their mortgage, up from 58 last year.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Even if you snap up a property at the average age of 34, and take out a 25-year mortgage, it only takes a little bit of life to get in the way to leave you repaying well into retirement.

“If you end up dipping into your property equity, or face divorce in your 40s, you can push your final repayment date into your 60s.”

When people expect to pay their mortgage off

By the age of 5015%16%
Over the age of 707%5%
Don’t know11%9%

The platform added with higher property prices borrowers were taking longer to save a sufficient deposit and earn enough to qualify for a mortgage.

It also noted there were more buyers taking on longer mortgage terms, such as 35 years, in order to “boost affordability”.

Dominik Lipnicki, director at Your Mortgage Decisions, said house prices outpacing wage growth meant people were getting on the housing ladder later in adult life.

But he added: “The good news is that for those that can obtain a mortgage, rates are still very low and even a sizeable mortgage is often cheaper than renting.”

Comparison site Moneyfacts warned this month home ownership aspirations were “further out of reach” for many as the number of high LTV mortgage deals available dramatically declined year-on-year.

Mr Lipnicki also said: “We are still seeing older borrowers coming to an end of their interest only mortgage, without an adequate repayment vehicle in place.

“Going forward we are likely to see later life lending, such as equity release, as a widely used tool for the over 55s. The later life lending and standard residential offerings will be far closer aligned.”

Analysis by Key Partnerships found the number of equity release plans allowing interest payments more than doubled from October 2019 to August 2020, while the number offering fixed early repayment charges increased by almost half over the same period.

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