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
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
8 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
13 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
16 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
The Impact of Klarna on Mortgage Applications
17 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
22 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
14 Apr 2025
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
14 Apr 2025
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
More information
Trusted by
