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
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More than a quarter of UK adults in long-term relationships (26%) have reported that despite living together, they keep their finances separate from one another.
There has been a rise in both rent and mortgage costs over the last three years, with renters seeing a greater increase in their monthly payments than those with a mortgaged property.
Delayed Start Mortgages
14 days ago
The new Delayed Start Mortgage launched by Skipton Building Society allows first time buyers to postpone the first three mortgage payments. This product has been designed to help soften the blow of moving in costs for first time buyers.
Green Mortgages | Rewards and Benefits
16 days ago
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
When will mortgage rates fall further?
26 days ago
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
More information
Trusted by
