Why Today's First-Time Buyers Won't Be Mortgage-Free Until They're 63+

Online mortgage broker Mojo Mortgages analysed their internal mortgage data and uncovered 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. The following table is in order of the oldest predicted age of being mortgage-free to the youngest:

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.

Extending a Mortgage by 10 Years Will Cost The Average First-time Buyer An Extra £110,640 

John Fraser-Tucker, Head of Mortgages at online mortgage broker Mojo Mortgages, expresses concern about the long-term implications of longer mortgage terms

He 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.

Choosing a Longer Mortgage Term May Also Impact a First-Time Buyers Pension and Later Life Planning 

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.