More than one in six (17 per cent) people expect to be over the age of 65 by the time they repay their mortgage, research from Hargreaves Lansdown has revealed.
The survey, which was conducted by Opinium and asked of 2,000 people in May 2023, reported that almost one in ten respondents (9 per cent) expect to either by over 70 when they repay their mortgage or never pay it off.
Among those who were aged 55 and over and still had a mortgage, one in five expected to repay over the age of 70 (18 per cent), and 7 per cent said they’d never be able to repay their mortgage.
If you need to keep working to cover the mortgage, you could end up with a serious shortfall Helen MorrisseySarah Coles, head of personal finance at Hargreaves Lansdown said this was down to higher mortgage rates as she stated that these increased rates are likely to mean “even more people paying their mortgage later in life”.
However, this was not the only thing Coles blamed for this later paying off of mortgages.
"The cost of property shoulders much of the blame," she said.
"With the average cost of a home now at £286,000, building a deposit takes far longer – especially because we’re having to save while paying through the nose for everything from bills and rent to food. It means the average age of a first-time buyer has hit 30.
“The fact that first-time buyers are borrowing so many multiples of their income means repayments are stretched over a long period too. The English Housing Survey in 202/22 found that of those first-time buyers who had a mortgage, over half (56 per cent) had a repayment period of 30 years.”
The research also revealed that the average age that respondents expected to repay their mortgage was now 60, up from 57 a year earlier.
Explaining the risks of having a mortgage in retirement, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “If you plan to keep working past retirement age to pay your mortgage, you need to appreciate that you may not be in control of when you stop work.
“The number of people who are too sick to work has hit a record high, and is far more common in older workers. If you need to keep working to cover the mortgage, you could end up with a serious shortfall.”
Morrissey said that, while it’s not beyond the realms of possibility that a small mortgage can be covered using pension funds for the short term, it is important to work out how this might affect outgoings.
“If you are drawing from a pension, eating into the capital in the early days can have a huge impact further down the line,” she added.
Coles additionally cautioned: “If you expect to still be paying your mortgage in retirement, it’s worth thinking about what you can do now to protect yourself further down the line.”
tom.dunstan@ft.com
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