The Insurance giant Prudential recently carried out research which found that 25% of 2017s retirees will retire in debt. This is at its highest level for seven years.

These pensioners will on average owe debts of £24,300 costing about £224 a month. Most will take around 3 ½ years to pay them off, but around 7% will quite simply never pay them off.

About ¼ of all of these debts are due to mortgages, which at retirement have still not been paid off. There are a couple of reasons for this, the main one being that borrowers took interest only mortgages out in the 80s with endowment policies which were intended to repay the loan at maturity. Lots of these endowments got “surrendered” early on and no other plans were made to repay the capital.

The other reason is a simple one of affordability. With house prices being so high, borrowers often opt for longer terms on their mortgages in order to keep the monthly costs down, which means the terms creep into their retirement.

It’s all very well telling your lender that you intent to work until age 70, but often it’s the employer who decides if they want you to continue in the workplace. Fact is even if people do continue to work, they often go part time or into a less demanding (and therefore lesser paid) position.

For most people the move from work to retirement sees them having to cope with a considerable drop in their income. This is hard to take into account 20 years in advance and terms as well as interest rates therefore need to be carefully reviewed throughout the whole term of the loan.

My advice to everyone with a mortgage is to check the date it finishes, NOW to be sure that there is a plan in place to repay it. If you are able to make overpayments to reduce the term, then that’s a win / win whenever your mortgage is due to finish.

To speak to a mortgage adviser, contact us on 01628 507477.

Related articles:

Recent posts

With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove. 

Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.

Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.

Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.

Call us for more information: 01628 507477 or email: team@mortgagerequired.com.

According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.

The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes

Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.

Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.