A fifth of mortgage holders expect to repay into retirement: L&C

58% of those have no plan for paying off their debt once they reach state retirement age, and over a quarter said having a mortgage after the age of 65 makes them feel anxious.

Of those who don’t expect to be mortgage free by retirement and are without a plan to pay it off, 53% are currently over the age of 55.

The survey found that 19% are concerned about how they will afford payments as they enter retirement age and 8% of those over 55 don’t think they’ll ever be mortgage free.

The study also found that almost two fifths (37%) of those on an interest-only mortgage said that they don’t think they will be able to pay the remaining sum once their term ends.

Of those who own their property outright having held an interest-only mortgage previously, 46% say they relied upon endowment policies to pay off the remaining capital at the end of their period, with 35% using savings or investments.

L&C also found that a large number of people are being forced to continue working into retirement in order to pay off their mortgage. 27% of people who had already paid off their mortgage after 65 said they had to continue working in order to do so. Moreover, of those who think they will still be paying off their mortgage beyond 65, a third (32%) believe they will have to continue working in order to afford the payments.

When asked why people think they will pay off their mortgage later than originally planned, the cost of financially supporting a family came out top, with over a quarter (28%) of people putting their family first.

L&C's David Hollingworth said: “The fact that people increasingly have to work beyond their standard retirement age to pay off their mortgage is a concern. Many will see a dip in income post retirement which could pose affordability issues for older borrowers. Although homeowners will, and should, continue to aspire to pay off their mortgage before retirement, the reality for many could mean having a mortgage for longer.

"More of us are living and working for longer and in many cases taking the first step onto the ladder later in life. That, combined with high house prices and therefore a bigger mortgage adds to the likelihood of carrying mortgage debt into later life.

"The good news is older borrowers have more choice than ever, as the industry continues to innovate and cater for an ageing population. Lenders have become increasingly flexible in their approach to older borrowers and the retirement interest-only mortgage market is one that is only likely to see more growth."