It used to be part of the plan; you are born, you go to school, college and university. Then you get a job, you meet someone, get married, get a house, have children and retire at 65 having paid off your mortgage. And live out your golden years, in retirement.
Problem is, it’s not working out like that anymore, people are ten years older when they get their first mortgage. With over half of mortgages taken on by people older than 34. With average house prices now above £200,000 and wages not keeping up with the cost of living, it has made it really hard for people to get on the housing market. Therefore it takes longer to get there. It is not all bad, we are living longer, have healthier lives but do we really want a mortgage past 65?
The other part of this, is that mortgages are longer, they used to 25 years (well the average was), but if you read here , in our blog we spoke about how the term of mortgages has increased, and 40 year mortgages are not uncommon. So lets do the sums. If people are generally taking mortgages at 34, and they are on average mortgage term at around 30+ years even 40. Then if all that worked out for you, you would be paying right up to 64 years old. That is cutting it fine, so if you took a 35 year mortgage, unfortunately you are 69 when your mortgage ends. So I do hope you have a good pension or those first four years could be a real struggle in your retirement.
Another element is that people are looking to get mortgages much older, they are working later in life, so may be looking at new houses or to change and this maybe getting a new mortgage. Mortgages for people later in life (55 years or older), has increased over the last few years.
It may be just one of those things, that the way of life has changed, this capitalist dream may be a bit different now. Working later, as our health is better (thanks NHS), and its not all bad. We stay active, we keep social contacts and stay engaged. Working beyond 65 maybe your nightmare, and all I can say is that you either need to get on the property ladder earlier, or make sure your pension is going to pay out enough to afford mortgage payments each month. We did a blog to help saving for deposit here.
Make sure whenever you are looking for a home, speak to someone you trust.