Million or more mortgages now stretch into retirement years
More than a million home buyers have taken out home loans that will not be paid off until well after they are due to retire, new figures show.
Many home buyers are being forced to take out mortgages which stretch well into their retirement years, new research shows.
More than a million, or two in every five, home loans issued during the past three years will not be paid off until the buyer is in their late sixties or seventies, BBC News reports.
With interest rates hitting much higher levels in the last two years, many people are opting for longer repayment terms to keep the monthly costs down, according to pension consultancy LCP.
At present, only 3% of mortgage-holders are currently paying off a mortgage after the age of 65, statistics from UK Finance, the banking trade body, show.
Not a blip
Steve Webb, a former pensions minister who is now a Partner at LCP, says: “There is increasing evidence that taking out a mortgage which runs past pension age is an entrenched feature of the mortgage market rather than a temporary blip.
“This has profound implications for retirement planning, as it is likely to mean that savers may end up using already inadequate pension pots to clear a mortgage balance.”
Affordable
David Hollingworth, Associate Director at mortgage broker L&C, says: “There will often still be maximum age limits at the end of the mortgage term, and lenders will need to be sure that the borrowing will be affordable.
“That will require borrowers to show that their post-retirement income is adequate.”
Many people are also renting much later in life, according to investment firm Hargreaves Lansdown
Even when people reach their late 50s and early 60s, 11% are still in private rentals.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, says: “The proportion of people renting privately doubled during the 2000s, and while it has levelled off at around a fifth of households, or a third in London, we’re seeing people renting later in life.
“Even when people reach their late 50s and early 60s, 11% are still in private rentals.”
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