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The Times - Longer mortgages - Case study request

ended 02. May 2023

A journalist at The Times is writing a piece about longer mortgages and what it means for people's retirement incomes. On this occasion, he is looking for a case study rather than a broker comment.

He's keen to hear from any brokers with clients in later life or retirement who still have mortgages that haven't been paid off - He wants to speak to the case study directly, why they haven't paid off their mortgage and what they're doing about it, eg. they're not bothered about retiring and being mortgage-free.

In return for the case study, the journalist would quote/name-check the broker. If you have a client who would be happy to speak to The Times - please let us know in the thread.

9 responses from the Newspage community

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Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
There are lots of older borrowers with pretty chunky mortgages who are coming to the end of their terms and they have no way of repaying the debt without selling their homes. Many of these people have always been on interest-only and either have the option of taking a lifetime mortgage (equity release) or downsizing. Others hope they will be able to refinance to another lender or get financial support from their family, but in reality, they are reverting to 7% or 8% standard variable rates and panicking they have no way to pay off the debt.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
As a financial planning firm and mortgage broker, we have several clients who we've helped transition into retirement with outstanding mortgages that will continue. There's certainly a psychological hurdle to overcome, as for most people it seems alien to stop working whilst they have a mortgage. Under the right circumstances though, with proper planning, having a mortgage needn't be a reason to delay retirement. This can work well for those with adequate income in retirement from final salary pensions as well as those who can comfortably fund their retirement spending, including mortgage payments, from their pensions and investments. Several of the clients we work with are on fairly cheap fixed-rate deals. Add to that the prospect of paying an early repayment charge to clear the mortgage early and it's easy to justify keeping it going.
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Daniel Wiltshire
Actuary & IFA at Wiltshire Wealth
30 or even 40 year mortgages are sadly, becoming the norm for the new generation of home-buyers. It's a worrying trend that will inevitably have a knock-on impact on retirement plans, and will necessarily mean many borrowers will be forced to work till they drop.

Combined with low savings rates, a rising State Pension age and an increasingly insecure job market the future of retirement is like watching a car crash in slow-motion.
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Arjan Verbeek
CEO at Perenna
Longer term fixed rate mortgages are powerful for selected segments of the market, in particular first time buyers and later life borrowers. If a first time buyer had access to a 30 year fixed rate mortgages, the amount that could be borrowed would be 20% higher than on a short term product, thus providing the same boost as Help to Buy. People over 55 would be able to borrow on a fixed rate RIO and nor be forced to sell their house when an interest only matures. Long term fixed rate mortgages are the product that can fix the housing market.
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Gary Bush
Financial Adviser at MortgageShop.com
In retirement mortgages have in the past decade become an everyday discussion. I can remember lenders in the past saying nothing beyond age 65 and now there are a number of lenders who don't see the need for an age cap at all. With the cost of living crisis we are now seeing this is ever more true - clients just don't worry about paying off their mortgage and retiring as the likelihood of either of these occurring now is getting slimmer by the day. A lot of clients we are now seeing are taking out mortgages that will go passed their what would ordinarily have been retirement age but are comfortable with the fact. Call it the new normal but people want more out of their lives now than sitting and festering and so working longer and still being in the property market are the obvious knock-on effects of this.
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Matthew Jackson
Director at Mint FS
The longer the mortgage , the more interest you pay overall - and if you take this past your planned retirement age you will affect your income in retirement.

Short term planning or advisers focused on commission and not their clients future plans have caused both the average length of a mortgage to increase and the number of mortgages that extend past age 70 sky rocket.

What is also worth noting is that a large number of these mortgages are on an interest only basis - we have seen a huge increase in enquiries from clients with Interest Only mortgages with the term ending and no way of repaying these.

This is short termism from an advice point of view at its worst , and clients are lucky that the later life lending landscape has evolved to offer them solutions where previously there would have been none.
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Rob Gill
Managing Director at Altura Mortgage Finance
As people are living longer and working longer, it's only natural they will take out mortgages for longer. ONS figures show that a 55-year-old man has a life expectancy of 84 and a woman 87. It's perfectly reasonable they might work well into their 70s and have a mortgage to match.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The mortgage term someone is willing to accept, in my experience, is directly linked to the age they intend or hope to retire. Many younger borrowers are convinced they won't be retiring until age 70 and will not give a second thought to running a mortgage to that age. I have many professional clients that see retirement as age 75, some cannot ever see themselves stopping work completely, in turn they are happy to allow the mortgage to run beyond the traditional or state retirement age. Where clients have a more physical job, trades in particular, then there is more concern about retirement age and being mortgage free at that point; they know that the nature of their work means that their body won't allow them to continue into their 70's, so they will need to stop before then, ideally with no mortgage and a reasonable pension to fall back on.
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Michael O'Brien
Managing Director at Home of Mortgages
Clients between 55 and 70 looking for a mortgage extending into retirement often say they are happy to keep up the repayments to age 80, especially our self-employed borrowers. Clients looking at a capital and interest profile will be paying the mortgage down to guarantee that the mortgage is repaid. Those taking an interest only, will be 'planning' to downsize when the mortgage term ends.

The truth is, a large majority of them are expecting an inheritance, avoiding them needing to either work too long or downsize their property.

One of my clients is 83, sadly now has dementia and still has an interest only mortgage, perfectly afforded by her pension income.