According to research from Key, these over-55 borrowers are most likely to limit general spending or spending on leisure and entertainment, with almost a third saying they cut back in these categories.
One in five say they are only going to be mortgage-free by the time they retire due to them pushing their retirement age back, while 14% say they are lowering pension savings to help clear their mortgage.
The latest figures from the Financial Conduct Authority (FCA) show that between 2018 and 2022, there was a 29% rise in the number of people becoming first-time buyers in their 50s.
UK Finance figures also show that the number of mortgages being extended beyond retirement age has gone up to over 60% compared to around 20% two decades ago.
The Key research shows that around 70% of over-55s expect to still be paying their mortgage off for two years or more and only one in eight expect to be mortgage-free within 12 months of retirement.
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The main reason for over-55s struggling with not being able to pay off their mortgage was the cost-of-living crisis, which was cited by half of participants, and 30% said they suffered pay cuts.
Nearly half of survey participants said that they were aware of specialist mortgages, equity release and retirement interest-only (RIO) mortgages, and 11% plan to use them in later life.
‘Very concerning’
Chris Bibby, managing director at Key, said: “Paying mortgages into retirement is clearly a growing issue, with increasing numbers of homeowners expecting to still be making monthly repayments after they stop work.
“That might sound worrying, but potentially a bigger worry is the sacrifices that people are making to ensure they are mortgage-free by the time [they] retire, which can include not saving into their pension and delaying retirement.
“That is very concerning and highlights the need for later life lending solutions, which can provide better outcomes for over-55s with mortgages. There are more flexible ways to manage money in the run-up to retirement and to achieve a better balance. Over-55s should seek specialist advice on the growing number of options available [that] could help them to have the retirement they want.”
The research reinforces findings by SunLife that showed almost a quarter of over-50s haven’t paid off their mortgage.
This article was first published on Your Mortgage‘s sister site, Mortgage Solutions. Read: Almost 60% of over-55s are making sacrifices to be mortgage-free by retirement
