Third of homeowners doubt mortgage will be paid off by age 65
A third of homeowners do not think they will pay off their mortgage by the age of 65, a survey reveals.
One in ten retirees still had mortgage debt when they retired, with an average outstanding amount of £38,000.
Research from LV= also showed that two thirds (63%) who retired with mortgage debt had to pay it off with their pension.
As part of the protection and retirement firm’s quarterly wealth and wellbeing survey, 28% of the 4,000 respondents said they would consider a lifetime mortgage – a type of equity release scheme for those approaching the age of 55.
It provides money for retirement in the form of a cash lump sum now, or regular income for the rest of your life. Interest accumulates over time and is repayable when you die, or move into long-term care and sell your home. See YourMoney.com’s Busting the common lifetime mortgage myths for more information.
Cost-of-living crisis puts spotlight on equity release
Of those homeowners considering taking out a lifetime mortgage, 31% said they would do so because of the current economic conditions. This includes inflation and rising interest rates as the base rate now stands at 5.25%.
David Stevens, director of savings and retirement at LV=, said: “The LV= Wealth and Wellbeing Research Programme highlights how the dream of a mortgage-free retirement could be over for millions of people.
“High inflation, combined with longer mortgage terms means that more people will be forced to continue paying mortgages during retirement. This could result in less discretionary income for pensioners to spend on the more enjoyable things they had in mind for their retirement.”
He added: “Retirees are also faced with difficult choices. For example, they may turn to drawing down money from their pension at a higher rate that may be unsustainable for them in the long run and increase the risk of running out of money.”