"Many older borrowers make an active decision to take out a mortgage in order to facilitate moving to their dream property or to undertake home renovations"
One in ten current mortgage holders anticipate not being mortgage free until they are over the age of 70, new research from Ipswich Building Society shows.
Younger borrowers have the greatest expectation about paying their mortgage off at an early age, despite the fact that the average age of a first time buyer is becoming progressively older.
People now in their twenties were most hopeful, expressing 52 as the age when they expect to have fully paid off their mortgage. People in their thirties hope to have repaid in full by 54, but older people were a little more realistic - people in their sixties estimated 64. Overall one in ten people expect to be over 70 and two thirds expect to be over 50.
37% expect to have a mortgage after 50 due to reasons other than not having reached the end of their term.
The most popular reasons cited were to cover living expenses (15%), to invest in a new property (13%) and to free up funds to spend on holidays, cars, etc (11%).
9% plan to extend or renovate their current home, another 9% expect to see changes in their employment status or career, and 7% want to give an inheritance to their children or grandchildren.
Richard Norrington, CEO of Ipswich Building Society, said: “We thoroughly expected younger people to be prepared to have a mortgage later in life because they are buying their first property so much later than previous generations. This is also compounded by the fact that some first-time buyers are also opting for a mortgage term longer than the traditional 25 years.
“What we do know is that the perceptions of having a mortgage later in life are changing. Many older borrowers make an active decision to take out a mortgage in order to facilitate moving to their dream property or to undertake home renovations to enable them to stay in the home that they love for longer. Taking out a mortgage later in life can also be an act of benevolence - where older borrowers want to help younger members of the family onto the property ladder for example.
“Lenders are becoming increasingly aware that later life borrowers are a hugely diverse group and are therefore looking to offer a variety of products that meet their needs.
“For those who can afford the monthly interest payments, retirement interest-only mortgages are becoming an increasingly popular way of extracting the capital tied up within a property. With no upper age limit and no specified term, RIO borrowers can remain in their home but use the funds for other purposes such as to pass on to children or grandchildren.
“It was just a couple of years ago that many providers were reluctant to lend to older borrowers and now they are actively trying to attract this type of customer. In particular, allowing pension income to be used for mortgage payments has been a real game changer. However, with these changes comes the challenge of ensuring that later life borrowers are selecting the most suitable mortgage product for their individual circumstances as standard residential mortgages, RIO and equity release all have their various merits.”