1 in 5 older homeowners expect to be paying off their mortgage in retirement

Over half a million homeowners aged 55+ will have an outstanding mortgage when they retire

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One in five homeowners aged 55+ do not expect to pay off their mortgages before they reach retirement, research from the Equity Release Council has found. 

The survey – in conjunction with Canada Life – suggests that over 572,297 older homeowners in the UK will still owe money on their mortgages after retiring. A further 19% are “unsure” if they’ll be able to clear their mortgage before reaching retirement.

Of course, mortgage debt isn’t just an issue for older homeowners. When looking at all age groups, 21% felt that their mortgage debt is preventing them from achieving a comfortable day-to-day lifestyle – up from 13% in 2021.

It has also been revealed that mortgage debt is keeping 13% of homeowners awake at night and preventing 11% from moving house.

The majority of respondents (90%) agree that it’s important to be mortgage-free when retiring. It’s no surprise then, that a third believe that tapping into their property wealth later in life could one day help their finances and retirement income.

Could mortgage debt worry be a reason for the equity release boom?

Paying off the mortgage is consistently a main reason for many homeowners deciding to arrange an equity release plan. Could this growing concern about taking mortgage debt into retirement be behind the surge in sales seen from 2019-2024?

Between 2019 and 2024, there was a 30% increase in the number of people over 55 arranging equity release, compared to the five years prior. A whopping 201,575 new plans were taken out in this period, compared to 155,082 in 2014-2018.

The survey also found that almost one in four (22%) mortgage holders in the UK – around 2.8 million people – say repayments are stopping them from saving more for retirement. Just 14% of respondents felt the same in 2021.

Jim Boyd, CEO of the Equity Release Council, says the surge in mortgage costs is straining people’s long-term financial security. He suggests that we’re entering a new era where accessing property wealth in later life becomes crucial: “With higher interest rates leading many people’s monthly mortgage payments to rise, this harsh reality is making it difficult for homeowners to prioritise retirement savings alongside their mortgage and wider bills.

“Rather than struggle against the tide, we need to recognise we are in a new era where the goal of becoming mortgage free will, for some people, be less important than the practical need to access property wealth in later life. With approximately £2.63 trillion of net housing wealth in homes owned by people aged 65 or over, there are clear signs that a shift in the national conscience is underway and property wealth is stepping into the spotlight for retirement planning conversations.”.

Speak to someone about equity release

The industry’s regulatory body, the Equity Release Council, insists that all customers must receive advice before signing up for a lifetime mortgage or home reversion scheme. The good news is that our friendly selected advisers are here to help. They will:

• Verify your eligibility.
• Check if a plan is actually the best financial option for you.
• Search for the most competitive equity release quotations.
• Explain all the pros and cons of each type of plan you are considering.
• Help you decide which plan best suits your unique wants and needs.
• Answer all your questions.
• Expertly guide you through the application process through to completion.

To talk to an adviser, please call 0800 096 2215, or request a call back for a time that suits you. Alternatively, you can use our free equity release calculator to get an indication of how much money you could release., or request a call back at a time that suits you.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn