Do you long for the day you'll be able to pay off your mortgage? Unfortunately, some people could find that it takes longer than they think, with many finding that their dreams of a debt-free retirement don't quite match up to reality.
Research from the Saga Equity Release Advice Service has found that one in three over-50s surveyed are still paying off their mortgage – on average, they still need to find £50,000 to be mortgage-free – and one in seven are still burdened with it in their 70s. These people will be faced with using their pension to pay off the remainder, and on average, they still have a worrying £40,000 left to pay.
Those still in their 50s will still have plenty of working years left to pay off their debt, but those a decade or two older may not have that luxury. This means that many retirees could find themselves in the unfortunate situation of using the pension savings they had earmarked for a few luxuries (or even everyday life) to pay off their mortgage instead, and they may not be able to enjoy the retirement they had planned as a result.
If you're faced with a hefty mortgage balance as you approach later life, there are things you can do to reverse your fortunes. What about remortgaging, or even discussing the options with your current lender? Around one in three over-50s have never tried to renegotiate their mortgage, despite the fact that shopping around could help them pay it off quicker – and could leave them with more money to enjoy their retirement – particularly if they remortgage to one of the fantastically low rates currently available.
However, some could be put off going down this route for fear that their age could be a disadvantage, with one in 10 over-50s surveyed admitting that they were concerned about their lender's maximum borrowing age. For some, this could be a justified fear, as 7% said they've been prevented from moving to a more competitive deal because of their age, but that doesn't mean all is lost.
For example, some lenders are realising the fact that, because the average age of a first-time buyer is rising, many will be paying off their mortgage at a later age than has previously been the norm, and some are loosening their restrictions accordingly. Then there's the fact that many people are staying in work for longer, which means a lack of income won't be an issue.
But, for borrowers who are in their 60s and 70s, there could be a viable alternative – a lifetime mortgage, otherwise known as equity release. This could be a great way to release some of the cash locked up in your home and could reduce the impact of monthly repayments, too, and as long as you consider all the options carefully, it could be worth considering.
Alex Edmans of Saga commented: "Millions of older homeowners have found themselves abandoned by mortgage lenders and stuck in uncompetitive deals because of the unfair age restrictions that many lenders have in place. For those in retirement struggling to meet their monthly mortgage costs, it may be worth considering a lifetime mortgage to help ease the burden of their monthly repayments.
"This may not be suitable for all, so it is well worth speaking with a specialist adviser, who would consider all alternatives and review whether any state benefits could help provide some relief. It is also extremely important that people discuss their options with their family or loved ones and we advise our customers to do this before taking out a lifetime mortgage."
There's a lot to think about when it comes to this kind of mortgage, so it's vital to discuss the options fully, both with your family and with a professional. If you want to know more about it and find out whether it could be for you, contact our no obligation equity release service to find out more, and you may not need to worry about paying off your mortgage in retirement.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.