UK Finance’s recent “later life mortgage lending” data makes for an interesting read. It shows that, in the last quarter of 2025, a whopping 41,100 new loans were advanced to borrowers over the age of 55. This is up 15.1% year-on-year. The value of this lending was £6.8bn – up 20.5% compared with the same quarter a year previously.
Of these, over 13,000 were on a buy-to-let basis, so it shows that being a landlord remains a popular option for older borrowers. However, the vast majority, over 22,600, of these loans were residential – for instance, re-mortgaging or a new house purchase. It shows that, for many, the idea of entering retirement having paid off your mortgage remains a dream.
There are very good reasons for this. Soaring house prices have made it harder to get on the housing ladder, meaning people either get on it later in life or not at all. Those who do manage it are often taking on longer mortgage terms, that may mean you are paying a mortgage well into your sixties or even seventies – the data show that over 5,000 loans were made to borrowers over the age of 70.
Read more: How to save on income tax
This has massive implications for our retirement planning. The latest data from HL’s Savings and Resilience Barometer shows that 64% of households, where the home is owned outright, are on track for an adequate retirement income. This compares to 46% where a mortgage is still being paid and just 32% of renters – so the difference is stark.
It demonstrates the obvious yet enormous challenge at the heart of our retirement savings. If your working life outgoings are higher, it will make it harder to save for your retirement, and if you are carrying housing costs into your retirement years, that will also push up your outgoings. For many, it will be an extra bill that places severe strain on their budget.
There’s also the troubling issue of health to consider. You will remember in my column last week I talked about how healthy life expectancy has fallen, with the average person only expecting to live around 60 years in good general health. It raises the question of what happens if ill health means you need to leave the workforce and you still have a mortgage to pay?
Preparation is key. Having the necessary protections in place to ensure the mortgage gets paid if you are no longer able to work, whether that be through ill health or redundancy, is vital.
You will also need to ensure that your retirement income is sufficient to cover your housing costs. If you are carrying over a mortgage into retirement then you will need to be aware that the interest rate you pay may change over time – for instance if you have a tracker mortgage or you are re-mortgaging a fixed rate deal – so you need to make sure your income can deal with these fluctuations.