Thousands of UK households over DWP state pension age face fresh nightmare

Tens of thousands of people face having to pay their mortgages off past state pension age, which is currently set at 66

State pensioners run the risk of a fresh nightmare – as homeowners face paying mortgages past state pension age. Tens of thousands of people face having to pay their mortgages off past state pension age, which is currently set at 66 by the Department for Work and Pensions (DWP).

30,338 mortgages with at least 35-year terms were taken out by people over 36- last year, according to data from the Financial Conduct Authority, obtained via a freedom of information request by Quilter and shared with The i Paper.

Zara Bray, mortgage expert at Quilter, said that on the basis that it is short-term, taking out a longer mortgage now to get on the housing ladder “doesn’t need to be viewed negatively”.

“The key to avoiding challenges with a long-term mortgage later in life is to regularly speak to your adviser, as they will be actively scanning the market for improved rates or new innovative products that address the affordability strain,” she explained.

Steve Webb, partner at pension consultancy LCP, said that people taking out longer mortgages later in life might have to “raid their pension pot” to pay them off, on top of paying for their other living costs.

“Taking out a super-long mortgage in your thirties or forties can seem like a good way to get on the housing ladder, but it is fraught with risks,” the former Liberal Democrats Pensions Minister said.

“With millions of people not saving enough for their retirement, they can ill afford to divert part of their pension pot to clearing a mortgage or paying mortgage interest into retirement.

“In addition, mortgage lenders can have very little certainty as to what the financial circumstances of the people they are lending to will look like in decades to come, so there must be questions about whether some of this lending is responsible”.

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