A mortgage broker has expressed growing concern over lenders permitting borrowers to extend mortgage terms until the age of 75 or even 80, particularly for those in physically demanding professions. He cautioned that many borrowers would be unable to continue working until that age, and their pension income would not suffice to cover mortgage repayments.
Warning from Industry Expert
Jamie Elvin, director of London-based Strive Mortgages, which specialises in self-employed and sole trader mortgages, stated: "I'm increasingly worried about the fact that many lenders, including some high street banks, continue to let borrowers take mortgage terms right up until the age of 80 but are making their decision purely on a person's current earned income."
He highlighted that while this arrangement may work for some, such as those with desk jobs who can work into their 70s, it is not suitable for people in trades like scaffolding, building, plumbing, painting, and roofing. "Is a scaffolder realistically going to be climbing ladders and doing an extremely physical job until their mid-seventies and beyond? I honestly doubt it," Elvin added.
Risk of a Crisis
The primary reason borrowers extend mortgage terms is to make monthly payments more manageable. However, Elvin warned that this trend could lead to a significant crisis. "There is a real risk that this is a crisis in the making, up there with the interest-only mortgage crisis, and that we are kicking the can down the road by allowing too many people to borrow for too long," he said.
Elvin explained that these so-called 'marathon mortgages' often rely on the assumption that pensions will cover payments in later years. But many self-employed and tradespeople do not save enough for retirement. "Only last month a report by the Pensions Commission showed that 15 million people are not saving enough for retirement, a figure that could soar to 19 million without action. Basically, millions of Brits are going to be facing a severe income cliff-edge when they retire," he noted.
Consequences for Borrowers
This situation forces individuals to stop working due to physical inability while still having years of mortgage payments left. "That's what a problem looks like. The maths just doesn't stack up. Why lenders continue to do this is beyond me," Elvin concluded.
