And six out of 10 people whose mortgage will stretch into retirement admit they have no idea how they will repay it.
An estimated 3 million homeowners will still have a mortgage in retirement with many unsure how they will pay off the debt.
Nearly six out of 10 people whose mortgage will stretch into retirement admitted they did not have a plan for settling the loan, while 19% worry about how they will be able to afford repayments.
One in 10 people aged over 55 fear that they will never be mortgage-free, according to research carried out by broker L&C Mortgages.
The study also found that a third of people who will still be repaying their mortgage during retirement think they will have to continue with some form of work in order to make ends meet.
David Hollingworth, of L&C Mortgages, said: “The fact that people increasingly have to work beyond their standard retirement age to pay off their mortgage is a concern.
“Many will see a dip in income post-retirement which could pose affordability issues for older borrowers.”
Why is this happening?
A number of factors are contributing to the growing number of people who still have a mortgage when they reach retirement age.
Higher house prices mean people are taking longer to get on to the property ladder, while there has also been an increase in mortgages that have terms that are longer than the traditional 25 years.
The study also found that a quarter of people said the reason they expected to pay back their mortgage later than planned was that they were supporting other family members financially.
But a number of homeowners are in this situation because they opted for an interest-only mortgage, without making a plan for how they would repay the capital.
Above: Three-bedroom house for sale in Plaistow, West Sussex
Who does it affect?
The situation is obviously bad news for people who reach retirement and still have a mortgage as they may struggle to meet their monthly repayments.
It may also have a knock-on effect on younger generations, as parents are less likely to be able to help their children get on to the housing ladder if they are still repaying their own home loan.
What’s the background?
People who reach retirement without repaying their mortgage have a number of options.
If they can demonstrate that their current repayments are affordable, their lender may be happy for their mortgage to continue until they are 70 or even 80.
Hollingworth said: “Mortgage options for those that can demonstrate ongoing affordability are growing in number, so it makes sense to seek advice sooner rather than later.”
If they have significant equity in their home, they could also consider moving to a smaller property or a cheaper area, which should enable them to reduce the size of their loan or even be mortgage-free.
Another option could be to take out an equity release mortgage to repay their outstanding debt.
Equity release mortgages are aimed at older homeowners. They are interest-only, with the capital and interest only paid when the homeowner either dies or sells the property.
Top 3 takeaways
- An estimated 3 million homeowners will still have a mortgage in retirement with 58% unsure how they will pay off the debt
- One in 10 people aged over 55 fear that they will never be mortgage-free
- A third of people who will still be repaying their mortgage during retirement think they will have to continue with some form of work in order to make ends meet