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
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.
Renters' Rights Act
Yesterday
The Renter’s Rights Bill became law at the end of October, which means it has been signed off by the King, and it is now the Renters’ Rights Act. Despite this becoming law, these changes are likely to start changing within the next six months, with the aim of being fully implemented throughout 2026 and into 2027.
Green Mortgages | Rewards and Benefits
Yesterday
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
Costliest Streets in Great Britain
5 days ago
Recent data from Rightmove shows the most expensive streets in Great Britain, with the majority being situated in the capital.
The Bank of England Governor, Andrew Bailey, has advised that, due to the “very big energy shock” the economy is facing, they won’t be in a rush to increase UK interest rates.
Many homeowners don’t realise that a simple act or oversight could invalidate their home insurance policy. Home insurance is essential in protecting your most valuable assets; however, it is important to understand what affects your cover to ensure you are fully protected.
In certain areas, impressive views are one feature that buyers are willing to pay price premiums of more than 30 per cent.
The UK mortgage market is seeing lenders withdraw deals and hike mortgage rates amid the escalation of conflict in Iran. This isn’t great news for borrowers, with the average rate for a two-year fixed deal sitting above 5%.
More information
Trusted by
