Partnership has warned that it is vital that those who are considering retirement reduce their mortgage borrowing as much as possible, as its data reveals that half of over-40s believe they will still be repaying their mortgage or paying rent when they retire.
According to Partnership’s research from a sample of 2,817 people, 31 per cent expect to be repaying their mortgage and 20 per cent expect to be paying rent.
In the 66 to 70-year-old age group, from a sample of 2,817 people, 18 per cent believe they will still be paying rent when they retire and 15 per cent believe they will still be paying off their mortgage.
Although most people aspire to owning their own home, a significant amount will be making mortgage repayments, on average £514 per month or 47 per cent of retirement income, when they retire, Partnership’s research showed.
Additionally, with 35 per cent of households in England living in social or private rental accomodation, a number of retirees will need to meet these costs later in life, on average £399 or 37 per cent of retirement income.
Alongside meeting housing costs, retirees are also likely to be put under other financial pressures as they keep up with meeting costs such as council tax, utilities and upkeep of their property.
Mark Stopard, head of product development at Partnership, said: “Most people aim to own their own home by the time they retire but the trend towards remortgaging, purchasing later in life and being kept off the housing ladder by high house prices means that this is out of reach for almost a third of people.
“This may see some people taking advantage of the opportunity to work longer but for some people – especially those with health issues – this is simply not an option.
“While those in private or social rental accommodation need to focus on securing sufficient income to meet these costs, those who are still repaying their mortgage have more options.
“Either they can use part or all of their pension to repay the borrowing – although this is likely to significantly impact on their later life income – or they can use equity release which can mean they will leave less to their families but face less financial pressure.
“When people consider their retirement, it is vital that they look to reduce their mortgage borrowing as much as possible. No one wants to worry about cutting back on essentials such as food and heating to meet housing costs when they should be enjoying retirement.”
ruth.gillbe@ft.com
