08 Aug 2018
Is paying a mortgage at 70 going to be the new norm?
Will you still be paying your mortgage off when you are 70?
A new survey from pension and investment company Aegon shows that 14% of people think they will be in this undesirable situation.
Traditionally, mortgages were paid off well before you stopped work.
But Aegon says a combination of getting on the housing ladder later, higher house prices and the ability to borrow for longer mean that one in seven people expect to be repaying their mortgage into what would normally be considered retirement years.
Steven Cameron, pensions director at Aegon, said: “Paying off your mortgage in time for your 70th birthday is now far from a given.
“Those left with an outstanding mortgage on their property face the prospect of either budgeting mortgage payments into their retirement or, alternatively, continuing to work.
"We know that one in four people expect to still be working at 70, but not everyone will be fit enough or want to do so.
"That’s why it’s good to see the development of new solutions for older borrowers, such as retirement interest-only mortgages.
"As our population ages, we need to look creatively at how to join up employment, pension and housing policies.”
Generation rent
The study also indicates that generation rent is here to stay - as 42.5% of people currently renting their home think they will still be renting at the age of 70.
Aegon says that, with younger generations finding it harder to get on the property ladder, the UK is set to lose its claim of being a nation of homeowners as the population of lifetime tenants continues to rise.
In the 10 years to April 2017, the percentage of households privately renting increased across all working age groups.
Mr Cameron added: “Our survey suggests that we will see an increase in the number of lifetime renters in the future. As younger generations increasingly fail to get onto the property ladder, renting a home becomes the long-term plan and for many the only realistic option.
“But the impact rent payments will have on your retirement plans needs to be carefully considered.
"People need to consider how feasible it is to fund rent when they are no longer earning a salary.
“With rents on the rise, you need to ask: will your retirement income be enough to cover rent and other living expenses in retirement?
“Even without having to fund housing costs in retirement, many people are not saving enough to maintain their lifestyle after work. If saving more into a pension is not an option, working into later life might be the only choice tenants have to keep a roof over their heads.”
Personal financial planning
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