House Doctor: 'We'll be nearly 70 when we pay off our mortgage. What can we do?'

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The Independent Online

Question: My husband and I both work, are in our late 50s, but have discovered we've still got 11 years to go on our mortgage. It was only a review of our personal finances for some pension planning that unearthed a forgotten remortgage in – so we'll both be in our late 60s when we finally finish paying off the remaining £19,000. It's not a situation we'd like to be in – is there anything we can do? Wendy Andrews, Hove

Answer: A struggle to meet monthly mortgage payments is hardly one of retirement's biggest selling points.

When you stop working, you're left with a fixed income – usually a mix of state and private pensions – that leaves you less financial flexibility to deal with large ongoing expenses.

This can make it difficult to afford a mortgage past retirement age, which is why home loans are designed to be paid off over a quarter-century on the assumption you'll manage to clear the debt in time.

Although the standard 25-year mortgage can be stretched to 30 or even 40 years – lowering monthly repayments to make it more affordable to borrowers – you'll actually end up paying more in interest over the loan's lifetime and can end up in the quandary you face now.

You're not alone: research from Aviva highlights how nearly three-quarters of over-55s are worried about the rising cost of living causing them to review their spending habits

Most critical are over-55s it found, where the mortgage debt is at "a significant level" – £64,511 on average – leaving them entering retirement with considerable debt worries.

Although you don't detail the size of your mortgage or any savings cash you may have, your position isn't as bleak as it might seem.

Your options are limited, warns Melanie Bien at Private Finance mortgage broker, but you should still be able to take advantage of working today to clear your debt in the future.

"Your most likely way out could be to overpay by as much as you can and clear the outstanding balance more quickly," she stresses. "Most lenders will let you overpay by up to 10 per cent – £1,900 in your case – each year."

Since you're both working, you'll hopefully have the opportunity to use part of your incomes to put cash towards this – whether it's by cutting back, say, or earning extra in overtime.

Any spare savings can also be used to overpay up to the same 10 per cent limit, Ms Bien adds, "but it is usually very difficult to get the cash back again if you need it in an emergency".

Unless you've a flexible mortgage that lets you take payment holidays once you've paid in savings, you won't be able to touch it again so ensure you have some in reserve for emergencies.

Alternatively, says David Hollingworth at the broker London & Country, you could see if it's possible to remortgage to a shorter loan length – "shrinking it from 11 to 5 years, say".

This way, he adds, "your monthly repayments will immediately rise in the short-term but at least you're currently working and can hopefully afford the higher sums" – and clear your home loan before you retire.

It may also be the case, he says, that you haven't changed your existing home loan for years and that it's actually unnecessarily expensive.

In which case, you could find an ordinary remortgage could turn out much cheaper – giving you room to overpay without it hitting your finances too hard. But Hollingworth warns: "There's no easy way out of this; you're going to have to spend some money now to ease the pain later."

housedoctor@independent.co.uk

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