Millions taking mortgage debt into retirement
Among the over-55s, one in five expect to service their mortgage into their 70s, while 5 percent say they will never be able to repay the debt. The pandemic has worsened the situation by hitting incomes, although mortgage payment holidays have inflicted little damage so far, as lenders increase monthly payments rather than extend repayment terms. Hargreaves Lansdown personal finance analyst Sarah Coles said millions face the strain of having major debt in older age, and the numbers are growing: “If you are carrying the burden of your mortgage into retirement, it could drain the life out of your golden years.
The average home now costs a record £261,743, some £22,000 more than a year ago, and buyers are struggling to pay down their borrowings in time.
As more young people go into higher education, and graduate with huge debts, they are likely to end up buying their first property at a later age.
Growing numbers are taking out mortgages over a 35-year term to spread the cost, pushing back the date at which they will clear the debt.
It only takes the odd “life hiccup” to run into trouble, Coles said: “If you lose your job, fall ill or get divorced, this could push your final repayment date back.”
Relying on working later in life is a risky strategy, Coles warned, as illness or unemployment could upend your plans.
