Around 57% of over-55s are making sacrifices in the run-up to retirement so they don’t have to make mortgage repayments when they retire.
According to research from Key, these over-55 borrowers are most likely to limit general spending or spending on leisure and entertainment, with almost a third saying they cut back in these categories.
One in five say they are only going to be mortgage-free by the time they retire due to them pushing their retirement age back, while 14% say they are lowering pension savings to help clear their mortgage.
The latest figures from the Financial Conduct Authority (FCA) show that between 2018 and 2022, there was a 29% rise in the number of people becoming first-time buyers in their 50s.
UK Finance figures also show that the number of mortgages being extended beyond retirement age has gone up to over 60% compared to around 20% two decades ago.
The Key research shows that around 70% of over-55s expect to still be paying their mortgage off for two years or more and only one in eight expect to be mortgage-free within 12 months of retirement.
The main reason for over-55s struggling with not being able to pay off their mortgage was the cost-of-living crisis, which was cited by half of participants, and 30% said they suffered pay cuts.
Nearly half of survey participants said that they were aware of specialist mortgages, equity release and retirement interest-only (RIO) mortgages, and 11% plan to use them in later life.
‘Very concerning’
Chris Bibby, managing director at Key, said: “Paying mortgages into retirement is clearly a growing issue, with increasing numbers of homeowners expecting to still be making monthly repayments after they stop work.
“That might sound worrying, but potentially a bigger worry is the sacrifices that people are making to ensure they are mortgage-free by the time [they] retire, which can include not saving into their pension and delaying retirement.
“That is very concerning and highlights the need for later life lending solutions, which can provide better outcomes for over-55s with mortgages. There are more flexible ways to manage money in the run-up to retirement and to achieve a better balance. Over-55s should seek specialist advice on the growing number of options available [that] could help them to have the retirement they want.”
The research reinforces findings by SunLife that showed almost a quarter of over-50s haven’t paid off their mortgage.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
