According to moneysupermarket.com, Britons are in a Â£35 billion “trap” already as they extend the term of their mortgage, increasing the probability of repaying this debt as a pensioner.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “It is clear that extending the mortgage term is a short-sighted solution which has a long-lasting impact. Not only do consumers end up paying significantly more, but they could still be paying their mortgage off at the same time as collecting their pension.”
Her warning comes as a study from One Account found that a third of Britons expect to be paying off mortgage debt as a pensioner.
In the moneysupermarket.com report, someone who extends the term of their home loan twice in their lifetime can end up paying Â£28,835 in additional interest, effectively a 30-year total term.
Ms Cuming said that the “smart option” was to keep the terms of mortgages short and clear debt to enjoy peace of mind during retirement.