Age of becoming mortgage-free goes through roof

- Two in five of us now don’t expect to be mortgage free until well into our 60s
- Huge change since mortgage-free average age of 51 a generation ago
- Four in five UK homeowners still aspire to own their home outright
- Today’s generation take out first mortgage later – at average age of 33

Over a third (35 per cent) of homeowners in the UK expect to be well into their 60s before they finally pay off their mortgage, according to new research by Post Office Mortgages.

The revelation is in stark contrast to just a generation ago when the average age of becoming mortgage-free was just 51 years old.

High house prices and the challenge of saving for a deposit have also meant that many homeowners are making the first step on the property ladder much later than their parents did – taking out their first mortgage at an average age of 33.

Other homeowners are pushing back outright ownership by remortgaging and using the equity in their home to fund other expenditures, the survey revealed. Nearly one fifth (18 per cent) stated that they have remortgaged to improve their current house or buy a second home, while a further one in 12 (8 per cent) have done so to support their children.

One in eight (12 per cent) are sure they will not be able to keep to their current mortgage term, while a further 14 per cent are sweating over meeting their mortgage terms.

However, the dream of owning our own homes outright remains as strong as ever – with four in five (79 per cent) saying this is something they wish to achieve.

John Willcock, Head of Post Office Mortgages, said: “One of the major financial changes that has occurred over recent generations is when we might get to pay off our mortgage.

“Whereas older generations have often lived mortgage-free for decades, for younger homeowners, who are getting onto the housing ladder in their thirties, the end of a mortgage is now being delayed.

“For many, the flexibility that remortgaging offers means they often use their mortgage to invest in additional properties or improve their current home – again pushing the age up.

“Wider societal trends, such as multi-generational living, higher divorce rates, and the need to pay for university fees are also having an impact and pushing back the age at which we might finally be able to say we truly ‘own’ our homes.“

Encouragingly, three quarters (75 per cent) of homeowners said they expect to pay off their mortgage in line with their original mortgage term, which on average is 22 years. And for those who have been able to pay off their mortgage already, the average time it took was 17 years.

Willcock added: “Clearly there is a growing number who wish or need to continue to repay a mortgage until later in life, but equally there are lots of homeowners that say they are ready and able to pay off their mortgage much earlier.

“Our findings, for instance, showed that on average homeowners in the UK expect to have paid off their mortgage before retirement – at age 54. Whatever your requirements, the Post Office offers a number of competitive mortgage and remortgage deals to appeal to all borrowers.”

Customers can pick up information about Post Office’s mortgage range and rates online at postoffice.co.uk/mortgages or from one of over 11,500 Post Offices branches across the UK.

Customers can also arrange a call-back from a mortgage specialist via any branch or by calling the Post Office directly on 0800 077 8033. To view the terms and conditions, visit postoffice.co.uk

Opinium Research carried out an online survey of 2,002 UK adults aged 18+ from 11th to 14th of June 2013. Results have been weighted to nationally representative criteria. City top up of 549 UK adults.

opinium.co.uk

The Post Office recently announced its intention to lend £2.5bn to mortgage borrowers and put in place 100 mortgage specialists by the end of the year.

In August 2012 Post Office introduced Mortgage Specialists to four of its larger branches in the UK, and a further three branches in November 2012. The Mortgage Specialists are able to discuss each individual’s needs and answer questions to help customers make an informed decision about the suitability of the products. In addition, the majority of customers will be able to get a decision in principle within minutes. First-time buyers, those wishing to move, or customers looking to switch to a better deal will be able to book a free, no-obligation appointment in selected branches.

Post Office Limited has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of many communities across the country. The Post Office has made a commitment to no more branch closure programmes. It provides around 170 different services and products spanning financial services including savings, insurance, loans, mortgages and credit cards. Post Office also offers Government services; telephony; foreign currency; travel insurance and mail services.

It serves around 20 million customers a week and half of all small businesses. 93% of the total population live within one mile of a post office and 99.7% within three miles. For many rural communities the post office is the only retail outlet. Post offices remain highly valued and trusted and are the focal point for many communities. For more information, visit postoffice.co.uk

Post Office mortgages in 2012 have won the following awards from What Mortgage magazine – Best fixed Rate Provider and Best Online Lender for the third year, and recently have also received Best Online Lender from Your Mortgage for the fourth year running.