A mortgage broker has issued a warning to people in physically demanding jobs, cautioning them against taking out mortgages that extend until age 75 or 80, even if lenders allow it. Jamie Elvin, director of London-based Strive Mortgages, which specialises in self-employed and sole trader mortgages, said that realistically, many borrowers would not be able to work until that age, and their pension savings would not cover their mortgage payments.
The Risk of Marathon Mortgages
Elvin expressed growing concern over lenders, including some high street banks, that permit borrowers to take mortgage terms up to age 80 based solely on current earned income. He stated, 'While this can be fine for some borrowers, for example someone who works from a laptop all day and can feasibly continue to do so during their 70s, it is not the case for people in the trades, such as scaffolders, builders, plumbers, painters and roofers.'
Physical Limitations
Elvin questioned whether a scaffolder could realistically climb ladders and perform extremely physical work into their mid-seventies. 'I honestly doubt it,' he said. He noted that extending mortgage terms to reduce current payments could lead to a crisis similar to the interest-only mortgage crisis, calling it 'a crisis in the making.'
The Pension Gap
The broker highlighted the mismatch between the theory of marathon mortgages and reality. Many self-employed and tradespeople assume their pensions will cover final mortgage payments, but Elvin said they often do not save enough. He cited a Pensions Commission report showing 15 million people are not saving enough for retirement, a figure that could rise to 19 million without action.
'Millions of Brits are going to be facing a severe income cliff-edge when they retire,' Elvin warned. He described a scenario where someone must stop work due to the physical demands of their job but still has five to ten years of mortgage payments left, with no income to cover them. 'That’s what a problem looks like. The maths just doesn’t stack up. Why lenders continue to do this is beyond me,' he concluded.
