Your mortgage is likely to be the biggest loan you will ever take out in your life, but most people hope to have paid it off by the time they reach retirement. However, this is looking increasingly unlikely with nearly one in three people (31.7%) looking to still be repaying their mortgage by the time they're 61 or over, according to research by Ocean Finance.
One in 20 people questioned (4.5%) will be over 70 - older than the current state pension age - by the time their loan is paid off, and this can have knock-on complications.
In retirement people may not have a regular salary coming in and will therefore have to turn to their pension, or their hard-earned savings, to pay off their mortgage. With there being no default retirement age anymore, many may be forced to continue to work to be able to afford mortgage repayments and therefore abandon personal plans for their long-awaited retirement.
Retirement used to be a time when pensioners could sit back and enjoy what they have worked hard for all their lives, but it seems that having a specific cut-off date when the need for work ceases is becoming more of a luxury rather than a given.
More reassuringly, the average age of the homeowner finishing paying off their mortgage is between 51 and 60, but that doesn't help nearly a third that will still be struggling with this debt on their shoulders.
Where you live appears to have an effect on whether you are likely to have paid off your mortgage by your 61st birthday, with 18.7% of people living in the East Midlands most likely to still be making repayments over the age of 61 compared to only 7.8% in the South West.
Ian Williams, of Ocean Finance, said: "It's great that most people will have repaid their mortgage before they retire, but the fact that nearly one in three mortgage customers will still be repaying it once they're aged over 61 is worrying.
"Not long ago, most homeowners would have paid off their mortgage by the time they reached their 50s and so could enjoy living a few years mortgage-free before they retired, or even choose to retire early. But as the average age of first-time buyers continues to rise, millions are now in a situation where they won't have finished repaying their mortgage until they're about to retire.
"For those that can afford to do so – and where the provider allows it - overpaying the mortgage each month can knock years off the term of your mortgage, which could help ensure it's cleared well before your planned retirement date."
Paying off a mortgage isn't just as easy as choosing one product for life and paying monthly instalments – you need to make your mortgage work for you. Shop around for the best products and rates and don't be afraid to switch when the mortgage isn't working for you anymore, such as if your fixed rate period runs out, but be aware of fees that may be payable.
Mortgage interest rates are extremely low at present compared to any other time in recent history and this is something you can definitely use to your advantage helping you to clear your debt quicker. If you find your monthly payments have dropped but you still have the same income coming in, don't fritter it away but instead use this opportunity to make overpayments on your mortgage - you'll be grateful for it later down the line.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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