As first-time buyers become older and more people start a new mortgage term when they move home, more borrowers will see their mortgage ‘crash’ into their retirement, said the Pru.
Forty-two per cent of first-time buyers are now over 35, with 21 per cent over 45 years old, plus over 10 million people over 35 have remortgaged, effectively setting their mortgage term back to 25 years, often more than once.
“At retirement, the average income drops by almost £4,200 and other financial pressures come into play,” said Ali Crossley, director for Prudential’s equity release plans.
“Only half (53 per cent) of homeowners nowadays feel it’s very important to own their home outright,” she added.
The Pru research showed property is increasingly viewed as an asset to be leveraged throughout life.
Rob Clifford, managing director of Mortgageforce, said: “On the face of it, it’s a significant statistic, but in reality, many people downsize their properties before, or on, retirement. As a result, a good adviser will always take the normal retirement date under consideration, but nowadays, few advisers would hesitate to recommend a mortgage, which on paper takes a borrower until 70 years old to pay off.”
