Many Postpone Retirement To Afford Mortgage Repayments
Although there are many schemes that help people claim a foothold onto the hugely expensive property ladder, soaring property prices rising faster than the average wage creates an uncomfortable situation for many.
Whilst some can acquire property, the exorbitant debt attached to their mortgage means that they will be paying off their home long into retirement, a new study from L&C mortgages has found.
21% of households with a mortgage believe that they will be paying it off after the main bread winner retires. This equates to around 3 million households that will need to fund their mortgage repayments after they stop working.
A fifth of respondents are concerned about how they will fund their retirement when they still have the shackles of mortgage repayments to consider. 53% of respondents over the age of 55 are certain that they will be unable to pay off their mortgage by the time they reach state retirement age. 8% of those over 55 are also certain that they will never be mortgage free in their lifetime.
27% of respondents that had paid off their mortgages beyond the retirement age of 65 said they were only able to do so if they kept working. Similarly, 32% of respondents approaching retirement age have said that they will need to postpone their retirement in order to afford their repayments.
L&C’s David Hollingworth said: “The fact that people increasingly have to work beyond their standard retirement age to pay off their mortgage is a concern. Many will see a dip in income post retirement which could pose affordability issues for older borrowers. Although homeowners will, and should, continue to aspire to pay off their mortgage before retirement, the reality for many could mean having a mortgage for longer.
“More of us are living and working for longer and in many cases taking the first step onto the ladder later in life. That, combined with high house prices and therefore a bigger mortgage adds to the likelihood of carrying mortgage debt into later life.
“The good news is older borrowers have more choice than ever, as the industry continues to innovate and cater for an ageing population. Lenders have become increasingly flexible in their approach to older borrowers and the retirement interest-only mortgage market is one that is only likely to see more growth.”
Although there are more mortgage products to cater for our ageing population, it is concerning that the current price of property is shackling a huge proportion of our older citizens to a life of work in order to fulfil their mortgage obligations.
Are you concerned by these statistics? How should we help people that still have a mortgage far beyond their retirement?