Nearly half a million British pensioners are still grappling with mortgage payments amidst high interest rates, according to recent research by over-50s experts SunLife.
Their ‘Life Well Spent’ report reveals that five per cent of retirees have yet to pay off their mortgages, with an average outstanding debt of over £60,000.
These mortgage holders are facing monthly repayments of £766, placing significant strain on their retirement income.
The situation is part of a broader trend of debt among retirees, with one in three living with some form of financial obligation.
Mark Screeton, CEO at SunLife, notes that while inflation has decreased, “the cost of living – including the increasing cost of debt – is still having a huge impact on the personal finances of retirees”.
SunLife’s research indicates that the average household income for a retired over-50 in the UK is just over £30,000 annually.
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Pensioners have struggled amid the cost of living crisis
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This means pensioners with mortgages are spending nearly a quarter of their entire income on repayments alone.
The situation is compounded by other forms of debt. Credit card debt is the most common, affecting 25 per cent of retirees, while eight per cent have personal loans and six per cent are paying car finance.
Across all types of debt, retired over-50s owe an average of £17,440 and are paying more than £600 monthly in repayments.
The broader context of retiree debt extends beyond mortgages. SunLife’s research reveals that 34 per cent of retirees have some form of debt, equivalent to more than 3.3 million people across the UK.
On average, retired over-50s in debt owe £17,440 and are paying more than £600 monthly in repayments.
This amounts to £7,226 annually, a significant sum for those on fixed incomes.
Mark Screeton says despite a drop in inflation over the past year, the cost of living continues to impact retirees’ personal finances significantly.
Equity release is emerging as a potential solution for homeowners over 55 facing mortgage debt in retirement. This financial product allows retirees to access tax-free cash from their property’s value.
SunLife’s data shows that most retirees are homeowners, with 72 per cent owning their homes outright. These properties have seen significant value increases over tim
Screenton noted: “Equity release is still a loan. But for those living on a fairly small income which is being eaten into by their debt repayments – including outstanding mortgages – the benefit is that they wouldn’t have to make those monthly mortgage payments anymore.”
While equity release can provide financial relief, the mortgage expert noted that it’s still a form of debt.
Homeowners can choose to make interest repayments or defer them, potentially impacting their estate’s value in the long term.
