Over 50% of First-Time Buyers Will Still Be Paying Their Mortgage at 65 — Here's the Contractor Angle

The numbers behind the headline

New Experian data shows that 52% of today's first-time buyers will still be repaying their mortgage when they reach 65. The average first-time buyer age has risen to 34.7, up from 33.7 in 2024 — a meaningful shift in a single year. The youngest buyer cohort is shrinking: the 18–24-year-old share has fallen from 9.1% to 7.3%, while the 35–44 bracket now accounts for over 30% of all first-time purchases.

The average first-time buyer mortgage now stands at £230,000, with terms regularly stretching beyond 30 years. Combine a higher starting age with a longer term and it is straightforward arithmetic: a significant share of new buyers will be carrying mortgage debt well into their retirement years.

This is not simply a headline figure. It has practical implications for lenders, borrowers, and especially for contractors — a group for whom the late-buying pattern is often not a choice, but a consequence of how mainstream lenders treat their income.

Why contractors tend to buy later

The contractor career path has always pushed homeownership later. The early years of contracting often involve building a track record, establishing a limited company, and accumulating the two-to-three years of accounts that most mainstream lenders demand before they will consider an application. By the time those boxes are ticked, a contractor who started contracting in their late twenties may already be approaching their mid-thirties.

But the bigger problem is what happens when contractors do approach a mainstream lender. Standard income assessment for the self-employed relies on salary and dividends as shown in company accounts. For a contractor who draws a modest salary and retains profits in their company — a common and entirely legitimate tax strategy — this method produces an income figure that bears little relation to actual earning capacity. A contractor on £400 per day, working 46 weeks a year, generates approximately £92,000 in annualised income. On a salary-plus-dividends assessment, that same contractor might show £30,000 to £40,000 on their accounts — less than half the true figure. The resulting mortgage offer is too small, the purchase falls through, and the contractor waits another year.

That waiting is not passive. It is expensive: rents continue to rise, deposit targets move upwards as house prices recover, and the window for a shorter mortgage term closes further with each passing year.

Lender age caps: what actually applies

The high street applies age caps at the end of the mortgage term, not at the point of application. Most mainstream lenders set their maximum age at end of term between 75 and 80. Some will go to 80 in exceptional circumstances. This means a 42-year-old applicant applying for a 30-year term would be 72 at the end — within range at most high-street lenders, though some underwriters will ask for evidence that the mortgage remains affordable into retirement.

Specialist lenders operate with considerably more flexibility. End-of-term age limits of 85, 90, and even 95 exist in the specialist market. This removes age as a meaningful constraint for the vast majority of contractor applicants and allows for full 30-year or 35-year terms regardless of starting age. The focus shifts entirely to income and affordability — and that is where the day-rate assessment method delivers its most important advantage.

Day-rate assessment: the numbers in practice

The calculation used by specialist lenders who accept contractor income is straightforward: day rate multiplied by five (for a five-day working week), then multiplied by 46 to 48 (working weeks per year, net of holidays). A contractor on £400 per day produces an annualised income of between £89,600 and £96,000 under this method. Most lenders will then apply a standard income multiple — typically 4.5 to 5 times — to produce the maximum loan.

Under the accounts-based method applied by mainstream lenders, that same contractor might show £35,000 in combined salary and dividends. At 4.5 times income, the difference between the two assessments is a borrowing capacity of £157,500 versus £432,000 — on the same underlying earnings. The contractor is not less creditworthy. They are being assessed by a method that was not designed for them.

A contractor on £400 per day buying in their 40s is entirely achievable with the right lender. The age concern that the Experian data highlights is real for employed buyers on restricted incomes. For contractors assessed correctly, the income capacity to support a 25-year or 30-year term — and the mortgage that goes with it — is often larger than they have been led to believe.

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