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The i Paper: Still paying off your mortgage in your 60s?

Journalist: Sarah Davidson, Freelance

ended 03. February 2023

More and more of us will still be paying off the mortgage into our 50s, 60s and even 70s. Given most people have expected to be mortgage-free when they retire, they haven't needed such a large income to support their lifestyles. Now, they will - either for the mortgage or to rent, something which is likely to become more frequent in future. 

  1. Are you seeing more clients in their 50s and 60s who know they'll still be repaying after they hope to retire?
  2. If this is happening more, what are the implications? There's already not enough rental properties, final salary pensions are going to start dropping out for the next generation of retirees. Are we looking at an increasing number of people who can't afford the mortgage or rent? 
  3. What should / can borrowers who know this is likely to be them do to avoid this problem?
  4. Given they're already facing a huge jump come time to remortgage, is overpaying even a possibility?
  5. Do you have any clients you've helped to plan to avoid problems in the future? And would they be prepared to be a case study?

6 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
We do see people with mortgages in retirement, but there are plenty of ways to mitigate this. Lifetime mortgages can clear a traditional loan and allow people to live in their property whilst the debt rolls up and no payments have to be made. Alternatively, people who have a pension tend to use their 25% tax-free cash to pay off mortgage balances. We are seeing this more and more often. More millennials who own properties will expect an inheritance once they retire unlike their parents received. Although we don't like to consider this, it can act as a repayment vehicle to make retirement easier. However, those without housing on low incomes are finding retirement tough. The cost of living has increased disproportionately for this demographic and the government should look at pension credit and make this more supportive.
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Editor
Justin Moy
Managing Director at EHF Mortgages
Mortgage brokers who have been around for some time will have seen a number of their clients now in this age bracket, and conversations will inevitably turn to how those people can support their family financially — and their plans to either keep or sell their home in the future. With the way property prices have increased over the past 10 years or so, most will be brick-rich but may be cash-poor, so a wider review of retirement income, investments and outgoings is so important, even if that decision is a few years away. Many lenders will allow borrowers to have a mortgage up to age 70 or 75, if the plan is to continue to work, but if retirement income is limited, a downsizing of home or a lifetime mortgage will release funds that can support lifestyle needs.
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David Robinson
Co-Founder at Wildcat Law
The myth of downsizing. I spent a lot of time reviewing interest-only mortgages with clients as their rates expired post-MMR. One of the common themes was that they would look to downsize to repay the mortgage debt at the end of the term or at some point in the run-up to it. This is now a common theme for many who are taking out mortgages into retirement. The reality is that most will not downsize. When it comes down to it, they will not want to sell the house they raised a family in, perhaps the home where their partner lived and died. The likelihood is these individuals will be forever carrying debt on their property, but is this such a bad thing? Rather than collective head burying we should instead be viewing this as a growing norm and maybe even design solutions for it.
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Mark Stallard
Director and Advisor at House and Holiday Home Mortgages
We're seeing more clients now in their 50s, 60s and beyond than ever before. Some people might think it's a problem to borrow money later in life but we take a much more positive view. Later life lending has meant many people can hold onto mortgages voluntarily if they want, giving them more options to live how and where they want. People are living and working longer, so why not? 
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"We often come across borrowers in their early 60s who took out Interest Only mortgages in the late 90s and are now finding that they need to repay the debt in the next year or two and have made no plans to do so. They have large amounts of equity built up in their homes due to increases in house prices, but do not want to sell and move to pay off the debt. The ideal scenario would have been to repay the debt over the past 15 years whilst interest rates were so low. Now with rates much higher, they are finding the idea of converting to a repayment mortgage very expensive. For some borrowers we can extend the term of the Interest Only mortgage for a few years, but this is simply kicking the can down the road. Others are opting for Equity Release/ Lifetime Mortgage but this too has its drawbacks."
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Austyn Johnson
Founder at Mortgages For Actors
To fit affordability, more and more clients are looking at a retirement age of 70. For my entertainment professionals, this is a possibility, however, builders? Scaffolders? We need to be realistic too.
We also try to talk long-term with our clients, if a dancer has to retire at 40, what are they going to do for the rest of their mortgage?
Mortgage advise is so much more than simple rate work.
I would prefer if everyone was paid up by 60, but is that realistic with the wage/house price ratio?