Paying off your mortgage can be thought of as being as mystical as the pot of gold at the end of the rainbow.
And for many it will stay that way, with a new report revealing that a third of young people think they’ll still be paying their mortgage beyond the age of 60.
Halifax’s 2016 Generation Rent report, which looks into young people’s attitudes and behaviour towards homeownership since the financial crisis, found that 34% expect to work beyond retirement to pay off their mortgage.
6% still expect to be paying their mortgage over the age of 70, while nearly one in 10 (8%) said they expect to be paying their mortgage throughout their life.
Less than half of the respondents (46%) think they'll be mortgage-free before they retire, dropping to just a third (30%) of non-homeowners, the report found.
It also highlighted some of the worries of ‘Generation Rent’, including the 44% who think they won’t be able to afford their mortgage payments in retirement, as well as 45%, who are worried that the cost of their mortgage will mean they have to work longer and 51% who think paying their mortgage will hamper their ability to save for retirement.
But despite their fears, young people are still aspiring to get on the property ladder, with the number of first-time buyers up to 300,000 in 2015.
Craig McKinlay, mortgages director at Halifax, said: “Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015."
He said the recovery has been fuelled by factors including government initiatives and low interest rates, as well as competitive deals.
“Although many of those late to the ladder will inevitably still be paying their mortgages later into life, they are increasingly taking a range of measures to ease the burden,” said Mr McKinlay.
The Generation Rent report has repeatedly shown that the deposit has been a barrier for most would-be homeowners, but the latest report suggests that high property prices are becoming a growing concern.
Despite this, just under a third of potential first-time buyers (31%) say house prices won’t affect their plans..
And to make buying a home more affordable, buying with a partner (49%) is the most likely measure a would-be first-time buyer is willing to make, followed by extending a mortgage beyond 25 years (34%).
Mr McKinlay added: “Borrowers should be cautious when looking to extend their mortgage beyond 25 years.
“This will not only increase the overall cost of the mortgage, but could have a potential knock on impact on their quality of life in retirement.
“A longer term will reduce monthly payments, but as homeowners build up equity they should look to reduce this term or make overpayments to ensure that the dream of owning their own home doesn’t turn into an unnecessary nightmare in later years.
“Home ownership clearly remains a key aspiration for young people and 2015’s strong first-time buyer numbers show the resilience of Generation Rent.
“Despite their concerns, they are becoming increasingly resourceful in their fight to reach the ladder.”