Almost a third (32 per cent) of mortgage holders don’t think they will pay off their mortgage by age 65, research from LV has revealed.
The research, LV Wealth and Wellbeing Research Programme, surveyed 4,000 UK adults and highlighted attitudes towards mortgages and retirement.
It found that one in 10 retirees still had mortgage debt when they retired, with the average mortgage debt outstanding at retirement being £38,000.
Additionally, the research discovered that 63 per cent of those who retired with an outstanding mortgage debt had to pay the mortgage debt with their pension.
LV director of savings and retirement, David Stevens, stated that the research highlights how the “dream of a mortgage–free retirement” could be “over” for millions of people.
“High inflation, combined with longer mortgage terms means that more people will be forced to continue paying mortgages during retirement,” he explained.
“This could result in less discretionary income for pensioners to spend on the more enjoyable things they had in mind for their retirement.”
Stevens added that the latest survey showed that 300,000 mortgage holders have fallen behind on payments in the past three months.
Equity release
LV also suggested that people are more likely to turn to equity release as inflation continues to rise.
The company stated that, as equity release has become mainstream, consumers are much more considered about how they could use equity release products to better suit their needs and lifestyle in later life.
The research additionally showed that 28 per cent of homeowners would consider a lifetime mortgage, with 3 per cent saying they already have a lifetime mortgage.
Some 31 per cent of those who would consider a lifetime mortgage said they would be more likely to because of the current economic conditions.
This increased to 45 per cent for those with a household income of £100,000 or more.
The research also examined which features of equity release those surveyed found most reassuring.
These included downsize protection (identified by 33 per cent of respondents) and the ability to transfer the lifetime mortgage to another property if you moved home (identified by 32 per cent).
The lifetime mortgage being provided by a well-known financial services brand was identified by 29 per cent and fixed early repayment charges was mentioned by 25 per cent.
Stevens commented: “It is very encouraging to see how the flexibility offered by today’s modern equity release products is welcomed.
“The role of advisers in supporting their clients through making these choices is incredibly valuable, especially with equity release, in helping customers decide with confidence what is right for them and addressing the worries they may have.”
tom.dunstan@ft.com
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