500,000 pensioners saddled with rising mortgage payments into old age - how to bring down costs
Half a million pensioners are still paying off their mortgage
GETTY
Some 500,000 pensioners in in the UK still have not paid off their mortgages as the cost of living crisis continues to hit households, according to new research.
In a survey of 2,000 people over 50 carried out by Sunlife, one in five out of nearly two-thirds of older homeowners are still paying off their mortgage in retirement.
Some 87 per cent of those with outstanding mortgages are still working with only 13 per cent of those still paying off their mortgages are retired.
This means that of all the pensioners in the UK, one in 14 are likely to be still burdened by paying monthly mortgage repayments.
Currently, this is the equivalent of half a million older people paying more than they otherwise would like.
On average, these retired mortgage holders still owe £33,627, which, over a remaining five-year period would be a monthly payment of £638 under the current base rate.Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Pensioners are being saddled with rising mortgage costs
GETTYMark Screeton, the CEO at SunLife, broke down how pensioners can bring down their mortgage costs as soon as possible.
He explained: "According to our research, the average homeowner retiree has a home worth more than £320,000 but a household income of less than £30,000.
“This means that the vast majority are cash poor and property rich. And while most own their homes outright, around one in 14 still have a mortgage.
"So, for those people, a chunk of that relatively modest income is still being spent on housing, rather than on making the most of life in retirement."
According to the tax expert, Britons should consider the benefits of equity release as a way of offsetting potential mortgage costs.
Screeton added: "For some of these people it could make sense to tap into the equity that’s tied up in their homes.
"But for many, downsizing to free up the cash is not an option – maybe it’s too expensive, or they have emotional or physical ties to their homes and neighbourhoods. That’s where equity release, where suitable, could offer a solution.”
This is a a tax-free option for qualifying homeowners aged 55 and over to let go of some of the cash tied up in their home, without having to move house.
As it stands, homeowners can usually release between 20 per cent and 60 per cent of the value of the property.
When someone gets older, they will be able to release more of their property's value.
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Experts are breaking down what pensioners can do to relief their mortgage costs
GETTYAny homeowner that does have a remaining mortgage will have to pay this off with the equity they release.
“So, let’s say a retiree has a home worth £327,020 and an outstanding mortgage of £33,627. If they were able to release 30 per cent of their home’s value, that would be just over £98,000. Once they use this money to pay off their remaining mortgage, they’re left with more than £64,000 to do whatever they want with,” Sunlife's CEO explained.
“Equity release is still a loan which accrues compound interest, but it doesn’t need to be repaid until you pass away or move into care permanently. This can free up retirement funds for those living on a pension income that’s being eaten into by mortgage payments.
“Even if you chose to make repayments to cover the interest on the equity release loan, these could still be considerably less than the repayments on a standard mortgage.”
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