Thursday, 21 April 2022

This is what you wanted.

From The Daily Express:

Pensioners may still be paying off mortgages as soaring property prices cripple Britons

The demand for longer mortgage terms of 35 years instead of the traditional 25 years has jumped 75 per cent as cash strapped owners want to keep their monthly payments as low as possible. Coupled with the average age of a first-time buyer (FTB) rising, an increasing number of people could be paying their home loans out of their pensions in retirement....

And the standard of living among retirees could decline significantly as they struggle to pay a mortgage out of a fixed pension, experts warn... Worryingly, the trend could be exacerbated by the current cost of living crisis which is likely to see the age of first-time buyers continue to increase.


Yes, Home-Owner-Ism leads to terrible outcomes, I keep saying that. So why doesn't the Daily Mailexpressgraph just say it?

11 comments:

Bayard said...

Look on the bright side, if you die with your mortgage still not paid off, the insurance will pay the rest of it, so why not remortgage to the hilt and use the money to make your declining years as fun as possible?

Unknown said...

Big rise in retired home owners with mortgages re-financing to equity release schemes or 'RIO' mortgages. Already happening.

Unknown said...

B. That is EXACTLY how a lot of equity release is being used.

L fairfax said...

@Bayard
I would guess that life insurance to pay off a mortgage gets more expensive after 65.

Mark Wadsworth said...

This whole 35 year mortgage and equity release thing is insane, they are sort of similar but sort of opposite, you might as well merge into one package.

Package deal: up to retirement age, pay off interest and principal to get down to (say) 50% equity. Then stop payments on retirement and roll up the interest until you die, bank sells house, takes its principal and accrued interest, takes a hit if need be and any surplus goes to heirs.

Or, the bank could just rent you the house and attach a savings plan to build up the funds to buy a lifetime no-rent lease when you retire.

Lola said...

BTW - Unknown is Lola - google issue

Lola said...

MW. precisely how I describe it to clients...ish. However. They will 'gloat' about 'how much money they have made'....

Lola said...

Actually thinking on it a bit more, maybe this is part of 'the plan'. You'll never actually own you own home. Any surplus on sale will be given to you to use as a 'pension' and set off against your state pension....

Bayard said...

Mark, until the insurance companies cotton on, the current system is a win for everyone except them. The retirees get a nice load of dosh through equity release to make their retirement fun, the heirs still get the house, unencumbered and the banks get their money back with interest. Why make any changes?

Lola said...

B. A lot of equity release providers are insurance companies. And ins cos are increasingly becoming mortgage cos.

Penseivat said...

Retire, sell your house, rent short term in the British summer and short term, in different sunny places, where it's often cheaper than the UK, in the British winter. Rinse and repeat.