Katrina Rohman, 40, and her partner Michael, 41, have taken out a 30-year mortgage, dubbed a “marathon mortgage”, that will see them paying off their house until they are 65 and 66, respectively.
“The choice is do you buckle down for a few years and have a long retirement, or do you enjoy yourself now?” says Katrina. This couple have chosen the latter.
Katrina, a freelance travel writer and the marketing manager of a hotel group, and her partner, a policeman, bought a three-bedroom house in a village outside Cardiff for £200,000 in 2019.
They took out their current mortgage, a five-year fix, in July 2021 at a rate of 2.79 per cent. Their balance is currently around £183,000. The total amount they will repay over the 30 years is just over £283,600, which works out as £1.55 for every £1 borrowed.
“The mortgage adviser suggested 30 years was a good option as the interest rate was better and it made the monthly payments more affordable.”
When the fixed rate ends in 2026, the pair will look into their options again: “If we can, and it doesn’t cost too much more, we would consider reducing to 25 years but, if rates keep going the way that they are, that’s not feasible.”
Instead of paying off their mortgage earlier, the pair have made the decision to save their extra money for travelling and socialising.
Katrina said: “We go on nice holidays. Lockdown taught us we need to spend time with friends and family. My partner is in the police and was working throughout Covid. Now we are out of that, we want to have weekends with friends and go out and enjoy ourselves.”
They have just come back from a holiday in Jersey and, to celebrate Michael’s 40th birthday in 2022, they went on a three-week trip to Las Vegas and LA, before heading off on a cruise to Hawaii.
They can only afford to do all this because their lengthy 30-year mortgage term means that their repayments are lower, at £784.29 a month.
“We save a bit each month because of the mortgage so we can afford to do this,” says Katrina.
“We both have good jobs but not fantastic jobs. We like to go away together, and we don’t want to compromise on that.”
That said, she admits that she does think about what will happen when they’re older and still repaying the mortgage.
“I do worry because you don’t know what life will throw at you. It’s always at the back of your mind but my mum is 65 and still working… She does get tired and can’t do as much as she could, but at her age, I’ll have to be paying the mortgage still, unless we manage to reduce it down or get well-paying jobs.”
It’s a particular concern for the pair as Michael’s work as a policeman is physically and mentally very demanding.
“It’s a job that has a shelf life. It’s mentally taxing, as every day it involves dealing with a lot of people with mental health issues and addiction… I’ve got it much easier than him,” admits Katrina.
“I don’t know what he will do afterwards and there’s an uncertainty with that, but he wouldn’t want to work in an office.”
The pair aren’t alone in taking out a long-term commitment; mortgages that last into retirement age are becoming increasingly popular.
According to UK Finance, the number of first-time buyers taking out 35-year-plus mortgages in 2005 was 2 per cent; in 2023, this had risen to 19 per cent. As it stands, more than one in five homeowners aged 55 to 65 currently have a mortgage and 6 per cent of retirees are still paying off their home.
Katrina believes that mortgages lasting into retirement will inevitably become the norm, especially among her generation.
“I think mortgages like this will become more common as people are buying later. My parents were in their twenties when they bought; we were mid-thirties, as it took five years for us to save for a deposit. Most of our friends expect to be paying their mortgages into their late fifties and early sixties.”
For the moment, Katrina is looking forward to her upcoming travels and the couple are planning a trip to Greece in October and then a holiday in Gran Canaria in January next year. “I don’t worry about the mortgage day-to-day but it’s always at the back of my mind.”
Marathon Mortgages: The Advantages & Disadvantages
Advantages:
As these mortgages are spread over a long period, your monthly repayments are lower, making them more affordable, and giving you extra disposable income.
Because of the above, the affordability stress tests are less stringent, meaning you can get on the ladder earlier and/or borrow more.
Disadvantages:
If you get a mortgage into retirement, you need a plan on how you’ll pay it off, either by continuing to work or selling your property.
This type of mortgage will be more expensive in the long run because you pay the capital back at a slower rate and therefore pay out more interest.
As it takes longer to build up equity, you’re more dependent on house prices increasing (and more at risk if they go down).
