Retirement is a time to relax and enjoy life, travel or spend quality time with the family. It certainly isn’t a time of life to still be worrying about paying the mortgage. Yet, according to figures from the Bank of England, more than a million mortgages have been issued since 2021 that homebuyers are likely to still be repaying well into old age.
There are a number of reasons for this. Extended mortgages are now more common, as people seek to spread the cost at a time where interest rates are higher, with lower monthly payments.
This, however, means the loan becomes more expensive over time, and undermines sensible retirement planning. Research has found that a third of mortgages in 2021 took repayments into pension age. Some analysts have warned that this could have significant implications for retirement planning, as pension pots could end being used to clear mortgage balances.
Young people may be tempted to opt for a long-term mortgage plan, but could it turn into a false economy in the long run? Certainly, some analysts think it is more than a behavioural blip, particularly as the average age of first-time buyers is only rising – now standing at nearly 34. The inevitable question then is how people will afford mortgage payments in later life. Of course, many people may earn more or downsize during working age – but might it also mean people working into retirement?
If you have a mortgage and are retirement planning in Cheshire, contact our team of specialist financial planners Hartey Wealth Management today.
