First time buyers face an extended and unprecedented amount of time before they are rendered debt free, according to a new study.
Comparing data between a survey of 2,000 people and statistics from the Office of National Statistics (ONS), the study compiler, the Centre for Economics and Business Research, found that while people expect to have paid off all their debts, loans and mortgages by the age of 57, they are actually more likely to be 69 when they become debt free.
Of course, even if a person avoids taking out a loan when they are strapped for cash, if they ever want to become a homeowner, the chances are that they will have to take out a mortgage.
Obviously, mortgages are huge loans, and take decades to pay off, but the type of mortgage you get can make a difference to this time frame.
Larger loan to value mortgages require smaller deposits, and are therefore favoured by those on low incomes, or who own no property or assets to sell to boost the amount of cash they have to purchase a property with. This is mainly first time buyers, and younger people.
A high loan to value mortgage then, means that they need smaller deposits, but will borrow much larger amounts of money which will take longer to pay off.
We are running the risk then, with the current property market, that current buyers will be far past retirement age by the time they finally pay off all their debts. The report predicted that current 16-24 year olds will hit the age of 74 before they are rendered debt free.
This puts people in a stickier situation financially for an incredibly large portion of their life, and can also make repayments much, much harder once they stop working due to old age.
Of course, one way to deal with this is to move to a smaller property, or remortgage, adjusting the terms of the mortgage and hopefully being able to
