"High inflation, combined with longer mortgage terms means that more people will be forced to continue paying mortgages during retirement."
Growing numbers are expecting to be making mortgage repayments after the age of 65, according to new research from LV=.
Its survey found that 32% of mortgage holders don’t think they will pay off their mortgage by age 65.
One in ten retirees still had mortgage debt when they retired with the average amount outstanding at £38,000.
63% of those who retired with an outstanding mortgage debt had to pay the mortgage debt with their pension.
As equity release has become mainstream, 28% of homeowners would now consider a lifetime mortgage and 3% of those surveyed already had one.
31% of those who would consider a lifetime mortgage said that they would be more likely to because of the current economic conditions. This increased to 45% for those with a household income of £100,000 or more.
The features of equity release that those surveyed found reassuring were downsize protection (33%), the ability to transfer the lifetime mortgage to another property if you moved home (32%), the lifetime mortgage being provided by a well-known financial services brand (29%) and fixed early repayment charges (25%).
Almost a quarter (24%) of people said that being able to repay up to 10% of their lifetime mortgage early without incurring early repayment charges was reassuring.
David Stevens, director of savings and retirement at LV=, said: “High inflation, combined with longer mortgage terms means that more people will be forced to continue paying mortgages during retirement. This could result in less discretionary income for pensioners to spend on the more enjoyable things they had in mind for their retirement.
“Our latest quarterly survey shows that 300,000 mortgage holders have fallen behind on payments in the past three months. Many people are on fixed-term mortgages ending in the next 12 months. That means millions of people face even higher mortgage payments when they come to re-mortgage or switch to a variable rate.
“Retirees are also faced with difficult choices. For example, they may turn to drawing down money from their pension at a higher rate that may be unsustainable for them in the long run and increase the risk of running out of money. One option is to use equity release to unlock the value from their home to potentially pay down mortgage debt.
"Our research reveals that those considering equity release are increasingly pragmatic about the option of accessing equity from their home as a way to help them achieve a more confident later lifestyle. It is very encouraging to see how the flexibility offered by today’s modern equity release products is welcomed.
"The role of advisers in supporting their clients through making these choices is incredibly valuable, especially with equity release, in helping customers decide with confidence what is right for them and addressing the worries they may have.”
