‘Delayed homeownership’ hits nearly half of buyers under 40

Nearly half (45%) of mortgaged homeowners under the age of 40 got onto the property ladder “much later” than they expected, research from the Equity Release Council has found.

Some 43% of mortgaged homeowners under the age of 40 relied on financial help from family or friends to buy their first home.

Seeing as many are getting on the ladder later, one in three (32%) homeowners with a mortgage are unsure if they will become ‘mortgage free’ before they retire or have already ruled it out. Indeed, one in five (20%) feel the idea of retiring ‘mortgage free’ is unrealistic.

Jim Boyd, chief executive of the Equity Release Council, said: “The realities of delayed homeownership are prompting people to reassess their attitudes to secured debt in later life.

“There are clear signs that paying a mortgage in retirement is no longer a taboo: for many people it can make the difference between financial hardship and enjoying a more comfortable lifestyle while also supporting family members.

“The ability to use property wealth to improve your retirement experience is a choice many homeowners have earned through years of paying a mortgage and building an asset.”

Many homeowners feel taking out a mortgage in later life can benefit them.

A third (32%) see it as a way to provide money to improve their lifestyles, while a similar proportion (31%) view it as a way to access funds to help out family members.

Nearly half (47%) believe their generation’s attitude to debt in later life is more accepting than their parents’, with those aged 25-34 most likely to feel this way (52%).

Claire Singleton, chief executive of Legal & General Home Finance, said: “It’s no surprise that borrowers are generally more comfortable to carry mortgage debt into their 60s and 70s and we know that the increasingly flexible range of products, such as Retirement Interest Only (RIO) and Optional Payment Lifetime Mortgages (OPLM), where customers can opt to pay the interest on their loan, are helping to make later life lending a good choice for many customers.

“It is also interesting to see that many younger home owners have had help from family to get on the property ladder, as our own research has shown that gifting funds to help loved ones is a popular reason to release equity.

“House price growth over the past decade means that, for some homeowners, their property is now their most significant asset; in fact, half of homeowners across England & Wales could unlock an average of £72,988 from their homes – above the average pension pot of £61,930. With the right advice, later life lending can help people make the best use of their property wealth.”

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