Average first-time buyer won’t pay off mortgages until they’re 63, research reveals

New analysis has revealed that the average first-time buyer in the UK is 33 years and 8 months old when they purchase their first home. With an average mortgage term of 30 years, this means that the average first-time buyer won’t pay off their mortgages until they’re 63 years and 8 months old.

However, the age can differ depending on the region that the first-time buyer resides in. London stands out as the region where first-time buyers face the longest path to mortgage freedom. The average Londoner buys their first home at 36 years and 8 months old, with a 30-year mortgage term, meaning they won’t be mortgage-free until they’re 66 years and 8 months old.

The West Midlands and South East follow closely behind, with first-time buyers in these regions expected to pay off their mortgages at 64 years and 5 months, and 64 years and 4 months, respectively. At the other end of the spectrum, Wales has the youngest average age for first-time buyers at 31 years old. With an average mortgage term of 28 years, Welsh first-time buyers can expect to be mortgage-free by age 59, the earliest among all UK regions.

Scotland also fares relatively well, with first-time buyers there expected to pay off their mortgages in 60 years and 7 months. This is partly due to having the shortest average mortgage term at 27 years. John Fraser-Tucker, Head of Mortgages at online mortgage broker Mojo Mortgages, said:

“While longer mortgage terms can provide some short-term relief in the form of lower mortgage payments, they come at the cost of significantly higher overall interest charges over the life of the loan.”

Our research has found that with a 10% deposit and the current average mortgage rate of 6.03%, the total cost of an average-priced house (£264,500) varies significantly on the loan term.

For a 25-year loan term, the total cost would be £461,400, which includes the principal amount and interest charges. However, if you extend the loan term to 30 years, the same house will cost an additional £53,760, bringing the total cost to £515,160.

And if you extend the loan term even further to 35 years, the total cost will increase by £110,640 compared to the 25-year term, amounting to £572,040.”

However, beyond paying more overall, mortgage borrowers may be forced to use their hard-earned pension funds to pay off their outstanding mortgage balance upon retirement, undermining their financial security in their golden years and increasing the risk of poverty in old age.

In less extreme cases, longer mortgage terms may deprive borrowers of an important period leading up to retirement when they could have been mortgage-free. This window of opportunity can be used to boost pension contributions or to enjoy experiences and activities that may not have been possible during their working years.

One Response

  1. Sounds about right. When they hit that point, 63 with a mortgage paid, there will be a mad scramble to pay as much into a pension as possible. This is one of the things that is being forgotten; cost of living going up = higher mortgage payments, longer mortgages, more money being spent on essentials = less disposable income = less savings for the future, less money being put into my children’s savings for when they turn 18, less money going into pension pots for retirement. This cost of living will be impacting us for 5, 10, 15, 20, 30, 40 years.

Want to have your say? Leave a comment

Your email address will not be published. Required fields are marked *

Read more stories

Join over 7,000 conveyancing professionals – Check back daily for all the latest news, views, insights and best practice and sign up to our e-newsletter to receive our daily and weekly round ups

You’ll receive the latest updates, analysis, and best practice straight to your inbox.