Dreaming of the days you’re debt-free?

Well, don’t get too excited, because according to new research that won’t be until you’re nearly 70.

A report from the Centre for Economics and Business Research (Cebr) has found that the average Briton won’t have paid off their debts until they’re 69.

This will come as a disappointment to most UK consumers, who expect to be free of their mortgage as well as unsecured debt like credits cards, loans and store cards by the age of 57.

But according to the report, commissioned by peer-to-peer lender Zopa, Brits are being overly optimistic about shedding the shackles of debt.

In fact, they are likely to be 64 by the time they’re free of unsecured debt – 69 if you include mortgages. 

According to the report the average 55-64 year old today still has £29,100 of debt.

The average household debt is up by nearly 18% since 2007

Average household debt is up by nearly 18% since 2007, and the average individual debt has increased by almost a fifth (17.6%) since just before the financial crisis in 2007.

It now sits at an average of £49,200 for all debt, £4,100 of which is unsecured.

The most common given reason for taking on debt is the financial inability to fund something upfront, while the most popular way of getting hold of cash is the credit card (41%), followed by unsecured loans (21%) and student loans (19%).

Despite having the most unsecured debt and owing an average of £14,200, 16-24-year-olds are the most optimistic about paying off their debts, reckoning they’ll be free of unsecured debt by the time they’re 38.

Instead, they’re unlikely to be free until 66 if they don’t become homeowners and 74 if they do.

According to the report, which included a poll of around 2,000 UK adults, more than a quarter of Brits (27%) said paying off unsecured debts is a struggle, while 24% said their debts made them afraid of the future.

21% have sleepless nights thinking about their debt and 15% are afraid to answer their door or phone because of their creditors.

But despite such concerns, just a quarter (24%) had tried to consolidate their unsecured debt.

Even more worrying, almost half of 18-24 year olds (49%) don’t even know what debt consolidation is.

Nearly half of 18-24 year olds (49%) don’t even know what debt consolidation means, according to Zopa’s report

It’s not all doom and gloom – depending on where you’re from.

If you’re in the North East, you can expect to become debt-free at 57, according to the report, because you’ll have bought a home younger and have less unsecured debt.

Bad luck if you’re in the capital though. The research found that Londoners should prepare to wait up to 20 years longer, hitting 77 before they’re debt-free.

That’s because despite higher incomes, Londoners take on more unsecured debt and acquire mortgages later.

An atom of type quote lives here

Giles Andrews, executive chairman and co-founder of Zopa, said: “There are lots of explanations for why people are overly optimistic about the time it will take them to pay off their debt.

“One is that younger generations are guided by the experiences of older ones as people used to become debt free earlier in life, as they owed less.

“It is possible to shave some years off your debt-free birthday, and indeed at Zopa we are passionate about helping people lead a richer life by taking control and clearing their debts sooner.”

Zopa, which says it matches borrowers looking for lower-rate loans with lenders looking for higher interest, said if people consolidate their debts they can save cash and pay off their debts sooner.

By consolidating, the average household could pay off its unsecured debt up to 21 weeks sooner, while the average person owing £4,100 in unsecured debt could clear it within five years.

“Over the past 10 years we have helped over 46,000 people consolidate their debt by helping them get debtfree,” Mr Andrews added.

“Due to our flexible repayment policy, our customers typically pay off their loan within four years; so many consumers could be debt free by the 2020 Olympics if they take action now.”