Later Life  

Older homeowners lack funds for a comfortable retirement

Older homeowners lack funds for a comfortable retirement

A growing number of UK adults are arriving at retirement not having paid off their mortgage, not having enough income or without adequate savings, according to a new report.

For some, financial difficulties are compounded by health issues that prevent them working in later life or require them to modify their homes, according to a report by Jackie Wells, independent policy and strategy consultant.

Ms Wells pointed to research which found that an increasing number of people are finishing to pay off their mortgage at a later date.

In 2012 70 per cent of finished paying off their mortgage under the age of 65 but in 2016 this had fallen to 54 per cent.

Meanwhile Ms Wells added that only a minority of older home-owners have an adequate retirement income and sufficient rainy-day funds or investments and property wealth.

She said: "Many industry players recognise that they do not currently provide later life borrowers with the tools they need to compare across their options for borrowing against their property.

"Different products, risks, funding models, sources of advice, and methods of remuneration and regulation all serve to make the industry operate in two distinct silos – one for residential mortgages and another for equity release."

Research published by the Council of Mortgage Lenders earlier this year showed that one in three mortgages taken out by someone under the age of 55 will run beyond state pension age.

UK Finance, which the CML has since merged into, is taking forward a project to encourage narrow the gap between the two silos of residential mortgages and equity release.

Ms Wells said: "The world of mortgage brokers is not something that many are familiar with but their first and natural port of call, the high street lender, may not be willing to extend them a mortgage and may be unable to provide any help with equity release.

"Friends and family may not be able to provide any useful insights and may simply warn against borrowing in later life. And, while some will investigate online, the internet is not accessible to all.

"Lending to those in later life is often more complex for both lenders and advisers. The financial affairs of borrowers are more complicated, the sales process is extended, provider research is less streamlined, compliance and regulatory costs are higher, and conversion rates are lower than for traditional mortgages."

The CML's research recommended that the new single public financial guidance body, due to be introduced from Autumn 2018 to replace the Money Advice Service, should explore ways of increasing the provision of and signposting to fuller information sources available to older consumers.

It also recommended that this should be integrated with pension guidance.

stephanie.hawthorne@ft.com