A third of mortgage holders will be paying back their loan later than expected

The majority of 18 to 34 year-old borrowers believe they will have paid off their mortgage by the time they’re 51.

A third of mortgage holders will be paying back their loan later than expected

Nearly a third (32%) of current mortgage holders, equating to four million people, may have to re-evaluate their finances in later life as their estimated repayment age will be older than they expected, L&C Mortgages has found.

In contrast the younger generation is full of optimism, with the majority of 18 to 34 year-old borrowers stating they believe they will have paid off their mortgage by the time they’re 51.

David Hollingworth (pictured), director of communications at L&C Mortgages, said: “What is becoming increasingly clear is the market has changed, people are facing up to the fact that they are going to have their mortgage for longer.

“It’s great to see such an optimistic younger generation who think they will be debt free by the age of 51, however the reality for many older borrowers is that they will be paying off their mortgage into retirement and beyond, which is clearly a shock.

“The optimism displayed by the younger generation is admirable but perhaps misplaced, and not realistic as our research shows that raising a family, among other commitments, can get in the way further down the line.

“People have to acknowledge they may be carrying this debt for longer than anticipated and plan accordingly.

“While some borrowers might be relaxed about borrowing later in life now, the debt isn’t going to magically disappear, and mortgage misery may become a reality down the line if they see a dip in income post retirement.

“As the industry continues to innovate and cater for an ageing population, older borrowers have more options at their disposal and anyone feeling worried shouldn’t panic and should seek expert advice.”

As people get older, they become more realistic about when they will pay off their mortgage. The average 18 to 34 year old believes they will be mortgage free by 51, 35 to 54 year-olds think it will be paid off by 58.

And those 55 and over on average think they will be borrowing into retirement age, paying it off by 68. A group of older borrowers are indeed resigned to a lifetime of debt according to the research, with almost one in 10 (8%) of those over 55 stating they don’t think they’ll ever be mortgage free.

Nearly a third (32%) of women said financially supporting a family is the main reason they expect to pay off their mortgage later than planned, while just a quarter (24%) of men gave the same response.

Of those who say that they may still be paying off their mortgage after 65, nearly two thirds (65%) of women asked said they don’t have a plan, compared to only half (50%) of males.

Over a third (37%) of men said they don’t think it matters what age you have a mortgage at, compared to a fifth of women (19%), which would suggest men have a more relaxed attitude to borrowing in later life, but are more likely to have formulated a plan.

Unsurprisingly, over half (58%) are on fixed rate deals, however nearly a third of customers (31%) currently sit on a standard variable rate (SVR).

Almost half (46%) of those who own their house outright said their last mortgage was on an SVR, suggesting borrowers could pay off their mortgage even earlier if they took time to find a better deal.

Hollingworth added: “It’s encouraging to see a large group of borrowers actively managing their mortgage and sitting on fixed rate deals.

“While there may be specific circumstances where sitting on an SVR makes sense, for the most part this group of people could be getting a head start for later life by shopping around and saving themselves a small fortune.

“Given people are worried about how they might afford re-payments as they get older, proactively taking action now could be the difference between paying off your mortgage before you retire or not.”