MortgagesOct 22 2014

Future housing costs: poll

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Half of over-40s expect to be paying either mortgage or rent when they retire, according to retirement provider specialist Partnership.

Partnership surveyed 2,817 UK adults in September and October 2014.

The poll, conducted by Opinion Matters, was to ascertain the level of retirement income people believed they needed in later life and the amount they expected to spend on their mortgage or rent.

Overall, about half of those questioned believed they would still be paying rent or mortgage after giving up work: 20 per cent paying a mortgage and 31 per cent paying rent.

Those with a mortgage estimated it at an average of £514 per month or 47 per cent of their retirement income, while those renting expected to pay £399 per month or 37 per cent of their retirement income.


 

All

40 to 50

51 to 55

56 to 60

61 to 65

66 to 70

Proportion paying rent

31%

42%

37%

22%

21%

18%

Proportion paying mortgage

20%

26%

18%

15%

16%

15%


In addition to meeting housing costs, pensioners are also likely to be put under financial pressure as they look to meet costs such as council tax (at an average of £115 a month), utilities (average £109 a month) and upkeep of their property (average £66 a month).

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.”

Adviser view:

Andrew Turner, chief executive of Turnkey Mortgages in Norwich, said: “This is further evidence to show the value of the advice a good mortgage broker can give.

“If it is impossible to achieve repayment in full by retirement age, we will undertake affordability checks based on the client’s current and future income to ensure that any mortgage we recommend is, and will continue to be, suitable and affordable for them.”