The mortgage landscape has changed in a number of fundamental ways over the last few years. Diverse factors such as the increase in house prices, students leaving university with larger debts, the trend towards couples buying their first homes and starting their families later in life, the ability to access pensions from age 55, are all having an impact on homeowners’ borrowing requirements and repayment patterns.

For the majority of us, our mortgage represents the biggest single financial commitment we are likely to make. Repaying it has a major impact on how we manage our finances. Over the last few years, more mortgages have been granted for terms in excess of the standard 25 years, not least because stretching the monthly repayments over a longer period can make them more affordable (although this does mean that the borrower will be paying interest for longer).

With house ownership proving a challenge for many young buyers, the average age at which they take on their first mortgage is more likely to be in their 30s. This means that many more borrowers will find themselves repaying mortgage debt well into their retirement years.

The amount of mortgage debt held by over-65s is set to double to about £40bn by 2030, according to a May 2017 study supported by the Building Societies Association.

KEEPING YOUR MORTGAGE UNDER REVIEW

If you are in the situation where your mortgage is likely to run on into your retirement, keep it under review. There may come a point where you may want to consider shortening the mortgage term if your finances mean that you can afford higher repayments. Alternatively, you might want to consider making overpayments to reduce the amount of mortgage outstanding. Getting good advice will help ensure that you manage your finances effectively, especially later in life.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

A recent ‘Health, Wealth and Happiness’ report1 shows that poor health (29%) and concerns over family members’ health (24%) top the list of things likely to impact happiness, above the sudden death of a family member or friend (24%), terrorism (23%) and the impact of Brexit (17%).

Despite health worries topping the list of concerns expressed, 57% of respondents haven’t taken out life insurance, with a further 11% not sure whether they have or not. This is particularly worrying when you consider how many of these people are likely to be homeowners who have mortgages.

Life insurance can be a financial lifeline at a sad and difficult time, paying off a mortgage if the borrower were to die. Critical illness cover can pay out a lump sum on the diagnosis of a serious illness as defined in the policy.

HOW PROTECTION POLICIES HELP FAMILIES

Protection policies don’t just pay a lump sum on death or the diagnosis of a critical illness, they can also help provide an income for families hit by an accident, sickness and unemployment, help parents pass their wealth on to future generations, and can have a major role to play in Inheritance Tax planning too. A payout from a policy could make the difference between your loved ones facing a financial struggle at a challenging and emotional period in their lives, and being able to maintain the sort of lifestyle you would want them to enjoy.

INCOME PROTECTION

With state benefit provision representing merely a basic safety net, how would you pay the bills if you were sick or injured and couldn’t work? If the unexpected were to happen, how would you and your family manage financially? Coping with a long-term illness or injury can be stressful enough without the added pressure of money worries. Taking out an income protection plan offers peace of mind and security for your family, and means that you would receive a regular replacement income every month for a defined period of time.

PEACE OF MIND

With so many different types of policy available it can be hard to know which one is right for your circumstances and offers the best value for money. That’s where we can help.

1 LifeSearch, 2017

Many people approach retirement owning a family home and want to benefit from the cash tied up in what’s probably their biggest asset. For some, the thought of downsizing and moving in later life to release cash is too daunting to contemplate. An equity release plan allows you to turn some of the capital value of your home into cash, without having to sell up and move away.

For those reaching retirement, equity release continues to be a way to top up their income, carry out home improvements, have a holiday of a lifetime, or pass on capital to other family members. In 2017, more than £3bn was released, according to figures from the Equity Release Council.

Lifetime mortgages – a type of equity release – have a seen a major surge in popularity amongst older homeowners, and have become the fastest-growing sector of the mortgage market.

Independent professional advice is essential; equity release isn’t the right solution for everyone. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should discuss it with your family.

Think carefully before securing other debts against your home. Equity released from your home will be secured against it.

Airbnb is an amazing business success story – there are now more than four million homes listed around the world. But homeowners who list their property on Airbnb or similar sites need to think carefully about their insurance position, as when they have a tenant in their property, they may not be insured under the terms of their cover.

Typical contents insurance won’t necessarily pay out if you make a claim on damage caused while your property was being let out. So, if you’re already a host on Airbnb, or thinking of joining the network, then you will need a comprehensive insurance policy that specifically allows you to rent out your property for periods of time, or covers you if you have tenants who sublet.

Airbnb do provide what they call a host guarantee, but make it clear that it isn’t an insurance policy and they recommend that you take out your own separate cover. There are now new top-up policies on the market to protect hosts. They provide cover for homeowners, tenants and landlords who let rooms, annexes or whole houses, and some allow you to increase your cover on a short-term basis.

In addition it is vital that homeowners considering letting a room or property in this way, seek consent from their mortgage lender first, restrictions may apply.