One in five mortgage holders, equivalent to three million people, believe they will still be paying off their mortgage beyond the age of 65, according to new L&C research.
Worryingly, more than half (58%) of those who don’t expect to be mortgage free by the time they get to retirement age don’t have any plan for paying off what they owe. Of these, over half (53%) are over 55 and so only have a decade to go before they reach the age of 65. One in four (26%) admit that having a mortgage after the age of 65 makes them feel anxious, whilst almost one in 10 (8%) of those aged 55 or above don’t think they’ll ever be mortgage free.
L&C found that nearly a fifth (19%) of those who think they will still be paying off their mortgage beyond 65 are concerned about how they’ll afford payments as they enter retirement, with many facing a drop in income once they stop work. The main reason why people are taking longer to pay off their mortgage is that they prioritise providing financial support to their family.
Almost two-fifths (37%) of those with interest-only mortgages, where the capital is repaid at the end of the mortgage term, say they don’t think they’ll be able to pay the remaining sum, or are unsure how they’ll go about it.
Of those who’ve previously had interest-only mortgages which they’ve now paid off, over a third (35%) said they’d used savings or investments to repay the capital, whilst nearly half (46%) said they’d used the proceeds from endowment policies.
Options for older borrowers
Many older borrowers choose to work into retirement so that they can pay their mortgages off. More than a quarter (27%) of those who paid off their mortgages after the age of 65 said that they’d had to work for longer to do this.
However, there are options available for those who don’t want to have to work into retirement so that they can fully pay off their mortgage. These include, for example, retirement interest-only mortgages, which allow older homeowners to make monthly interest mortgage payments until they die or go into long-term care. The capital is repaid to the lender when the property is sold.
David Hollingworth, of L&C Mortgages, said: “The good news is older borrowers have more choice than ever, as the industry continues to innovate and cater for an ageing population. Lenders have become increasingly flexible in their approach to older borrowers and the Retirement Interest Only mortgage market is one that is only likely to see more growth. Anyone feeling anxious about their options shouldn’t panic and should seek expert advice.”
Three million say they’ll be paying their mortgage in retirement