The Times highlights the soaring number of young people who are taking home loans that they won’t pay off until they are 70. The paper found that first-time buyers will need £100,000 more in their pension pot than other generations to pay back mortgages that run past retirement age. Until recently most savers paid off their mortgage while in work. Now, first-time buyers get on the ladder later and take on longer mortgages so that they can get larger loans. The average age of first-time buyers last year was 32, according to Halifax, up from 29 a decade ago, and they borrow an average of about £200,000. Moneyfacts, a research company, found that 59% of mortgage products now have a standard term of 40 years, up from 36% in March 2014. A typical first-time buyer with a 40-year mortgage would be paying off their debt until age 72. These marathon mortgages mean that many borrowers will be making payments well into their sixties and some into their seventies. Age Partnership, the UK’s largest over-55 financial adviser, said that more clients were retiring while still paying their mortgage. About 36% of borrowers who took out equity release loans last year used the money to pay off their mortgage, up from 28% in 2019.
The Times
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