Approaching retirement with an outstanding mortgage can be a source of concern for many in the UK. A survey conducted by Hargreaves Lansdown in April 2023 highlighted that 20% of individuals aged over 55 expected to still be paying their mortgage after the age of 70. Additionally, five percent expressed doubts about ever being able to clear their mortgage.
Have an outstanding mortgage in retirement is common. The LV= Wealth and Wellbeing Monitor revealed that 1 in 10 retirees had retired with outstanding mortgage debt, with the average amount of mortgage debt being £38,000. A concerning 19% of those retirees surveyed had debts ranging from £50,000 to £99,000, and 11% faced more than £100,000 in mortgage debt.
Mortgage worries for Pre-Retirees
The survey by LV found that many people nearing retirement worry about their mortgage. 33% of those surveyed didn't believe they would have replayed their mortgage by the time they turn 65.
Mortgage repayment strategies for people aged 55-64
There are several strategies that individuals contemplating retirement could consider for dealing with mortgage debt:
· continuing to work
· using tax free lump sum from a pension
· downsizing
· renting out a room
· or utilising equity release
Using Equity Release to Repay Mortgages
Retiring with a mortgage is a common concern for many people. However, there are options available to address this issue. One such option is equity release, which can provide financial flexibility and peace of mind.
Having an outstanding mortgage is one of the most popular reasons for releasing equity. According to Canada Life, nearly half (49%) of the people taking out Equity Release in 2022 used the funds released to pay off an existing mortgage. This approach allows homeowners to eliminate mandatory monthly payments, providing greater flexibility in managing finances during retirement.
Exploring Equity Release
For those considering an equity release plan to clear their outstanding mortgages, our article, "What is Equity Release? The top 10 questions answered", provides valuable insights and answers common queries.
To understand more about Equity Release and how we can help, read about how we approach Equity Release and our work with the Equity Release Council.
But most importantly, talk to a Mortgage and Equity Release planner before or after retiring to explore all your mortgage options and make informed decisions.
About the author
My name is Simon Restieaux and I have been advising clients on releasing equity from their homes for 4 years. I hold certifications in Mortgage Advice and Equity Release and have extensive knowledge and experience that can help you on your journey.
I have been providing advice for over 20 years to clients and make sure that I provide honest, tailored and friendly advice. I aim to support you every step of the way and ensure you never feel pressured.
Simon is a member of the Equity Release Council, which exists to promote high standards of conduct and practice in the provision of and advice on equity release. Read more about Financial Planning by TaxAssist becoming a member of the Equity Release Council here.