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A third of people expect to be paying mortgage into their retirement
A recent survey carried out by the Halifax has found that 1 in 3 people expect that they will have to work beyond the age of retirement to help pay off their mortgage.
The survey interviewed over 8,100 people aged 18 to 45 years old about how they felt about mortgages and their worries around borrowing. Populus who were commissioned by the lender found that 44 per cent of those questioned were worried that they will not be able to afford their mortgage payments when they get to retirement and 51 per cent were worried that their ability to save for retirement would be hampered by their mortgage repayments.
Less than half of all respondents believe they will be mortgage free by the time they retire, falling to just 30 per cent of non-home owners.
The survey however did find that the aspiration to own their own home was strong and many are taking steps to ensure that their financial burdens are eased when they join the property ladder.
Recent statistics have shown that the numbers of first-time buyers have risen back to previous levels over the last few years. 30,000 in 2015 were stepping on to the ladder for the first time.
The average age of the first-time buyer however has risen. It is now nine months older than it was recorded in 2010, with the average age now at 30.4 years old.
Over an 8-year period the percentage of first-time buyers who were taking up 35 year mortgages rose from 16 per cent in 2007 to 26 per cent in 2015.
Mortgages with a 20–25 year term however dropped during this same period. Only 30 per cent of mortgages were taken out with this term in 2015 compared to 48 percent in 2007.
The Mortgages Director of Halifax, Craig McKinlay, has advised that borrowers should be cautious when looking to extend a mortgage beyond 25 years.
“This will not only increase the overall cost of the mortgage, but could have a potential knock on impact on their quality of life in retirement.
“A longer term will reduce monthly payments, but as a homeowners build up equity they should look to reduce this term or make overpayments to ensure that the dream of owning their own home doesn’t turn into an unnecessary nightmare in later years.”
Scottish Widows pensions development manager, Robert Cochran, added that their research has suggested that many people in their 30’sand 40’s are prioritizing spending now over saving for later in life.
“Yet with younger generations expecting to be paying mortgages into retirement, it is more important now than ever that people push retirement saving up their financial agenda and get a better understanding of how pounds in a pension pot translate into income in retirement to avoid facing a financial time bomb at the stage when they want to stop working” says Mr Cochran.
For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.
Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.