Retired – and still paying off the mortgage

More and more of us are having to take out 30, 35 or even 40 year loans, but there are risks. Ash Manning, Mortgage Partner at Foster Denovo, comments on mortgage affordability in The Sunday Times article.

There was only one way for Jamie and Lauren Nazareth to move up the property ladder — take out a 39-year mortgage, but they could still be paying off this debt in retirement. The couple, both 31, signed up for a £450,000 loan with the Family building society last August to buy a house in Hanwell, west London.

The couple could be 69 by the time they make their final repayment. Their current state pension age is 68.

They are among the growing number of homeowners having to borrow for longer to afford their repayments. But, by doing so, they pay more interest and build up equity in their home more slowly. They are also less protected if interest rates rise and property prices stall — or even fall.

Ash Manning of the financial adviser firm Foster Denovo said: “Many of my younger clients have relatively high deductions on payslips, such as student loans and pension contributions, so extending the term as much as possible enables them to obtain the mortgage amount required to buy the property they want.”

Read the full article on The Times here.