Tens of thousands of homeowners warned over mortgage ‘ticking time bomb’ that ‘could leave them in poverty’

TENS of thousands of people face paying off their mortgages well past state pension age after taking out long terms later in life, new data has revealed.

Over 100,000 people aged 36 or over took out mortgages with terms of 35 years or more, meaning they would still be paying off their mortgage into their 70s.

This is considerably beyond the current State Pension age of 66, at which point many people have retired or semi-retired and are reliant on their pension income.

The data, obtained through a freedom of information request to the Financial Conduct Authority (FCA) by wealth manager Quilter and shared exclusively with The Sun, shows 100,511 people aged over 36 took out 35+ year mortgages between 2018 and September 2024.

And the number of people over 36 signing up to these lengthy terms gradually increased over that period, rising from a low of 5,911 in 2020 to 22,103 between January and September last year.

It comes after data last year from the Bank of England showed over a million people had taken out mortgages in the past three years that would run past state pension age amid a surge in demand for “ultra-long mortgages” to mitigate rising costs.

This is because longer mortgage terms generally mean that your monthly repayments will be lower, as you are paying the loan back over a longer time-frame.

Karen Noye, mortgage expert at Quilter, explained: “This sharp increase highlights growing concerns about housing affordability, rising interest rates, and changing socio-economic trends.

“The continued rise in property prices has made it increasingly difficult for buyers, particularly those entering the market later in life, to afford homes without significantly extending the repayment term.

“At the same time, higher interest rates have pushed up monthly payments, prompting many borrowers to stretch their mortgages to 35 years in an effort to reduce these costs.”

Experts are now warning that borrowers taking out such long mortgages at an older age risk struggling to keep up with their repayments in retirement, reducing their quality of life.

If you take out an ultra-long mortgage when you’re younger, you have more opportunity to pay down your debt and switch to a shorter term before retirement.

But if you start a new mortgage with a long term later in life, you may not have as much time to bring down your loan or improve your finances enough to move to a shorter term before you retire.

And, you could even end up fixing onto a higher rate down the line.

Dubbed a “mortgage ticking time bomb” by consumer champion Martin Lewis, this could leave people facing hefty repayments in their later years they have to cover with their pension income, reducing the amount they have to live on.

Mr Noye said: “For older buyers, longer terms help ease affordability constraints, but come with significant trade-offs.

“The ramifications of this shift are far-reaching, especially as more people approach retirement age with mortgage debt still to repay.

“Retirees on fixed incomes may find it challenging to manage mortgage payments alongside other living costs, particularly if they have not accounted for this in their retirement planning.”

Former pensions minister Steve Webb, now partner at consultants LCP, added: “We already know that millions of people are not saving enough for their retirement, and if some of that limited retirement saving has to be used to clear a mortgage balance at retirement, they will be at even greater risk of poverty in old age. 

“Serious questions need to be asked of mortgage lenders as to whether this lending is really in the borrower’s best interests.”

Experts have also warned that the rise in ultra-long mortgages could see more homeowners forking out a lot more long-term as they will end up paying far more in interest.

For example, someone borrowing £285,000 over 20 years at 5.81% interest would pay £2,010.71 a month, while borrowing the same amount over 40 years at 5.81% would cost them £1,530.53 a month.

“For many, this could erode their ability to save for retirement or meet other long-term financial goals,” Ms Noye warned.

These latest figures follow a warning from mortgage experts that around 700,000 households could face higher mortgage costs this year as their fixed deals come to an end.

Mortgage rates have been gradually coming down over the past few years and were expected to continue falling this year amid expectations that the Bank of England will keep cutting the base rate, which lenders use to set their own rates.

But in recent weeks, rising government borrowing costs may have made lenders question their decision to cut their own rates – meaning mortgages will remain a strain on households’ finances.

The Office for Budget Responsibility, which analyses the UK’s public finances, had previously forecast that mortgage rates would fall to 3.8% at the start of 2025, but it has now revised this up to 3.9%.

Nicholas Mendes, from broker firm John Charcol, said: “The coming year could be another painful one for mortgage holders, as government borrowing continues to exert significant pressure on mortgage rates through its impact on gilts.”

How else can I cut my mortgage costs?

There are several ways you can reduce your mortgage costs in both the short and long term, without extending your mortgage term.

Check you’re getting a good deal

Mortgage interest rates change regularly, so check if you could switch onto a better deal when your fixed term ends.

A good mortgage broker can help you find the best deal.

Go interest-only for a while

You might be able to switch to an interest-only mortgage for a period if you’re struggling with your repayments.

This means you just pay the interest off and don’t pay off any actual debt.

It’s best to switch back and start paying off your actual debt as soon as you are able to, though.

Overpay your mortgage

This can sound counter-intuitive, but overpaying your mortgage will reduce the amount you actually pay long term.

This is because you will pay less interest as you’ve paid off a larger chunk in one go.

In most cases lenders will let you pay off up to 10% of your total mortgage in one year.