Around 23% of over-50s have not paid their mortgages off, with the majority still working, according to a survey.
SunLife, which surveyed 2,000 people over 50, found that of the 68% that were still homeowners, more than one in five were still paying off their mortgage.
Approximately 87% of those with outstanding mortgages are still working. However, around 13% of those that are still paying off their mortgage are retired.
This could indicate that one in 14 retirees, equivalent to around 500,000 people, could be burdened with making monthly mortgage payments.
The average amount owed comes to £33,627, which, at the current rate of 5.25% on a repayment mortgage, could mean a monthly payment of £638.
‘Cash-poor and property-rich’
Mark Screeton, CEO at SunLife, said: “According to our research, the average homeowner retiree has a home worth more than £320,000 but a household income of less than £30,000.
“This means that the vast majority are cash-poor and property-rich. And while most own their homes outright, around one in 14 still have a mortgage. So, for those people, a chunk of that relatively modest income is still being spent on housing, rather than on making the most of life in retirement.
“For some of these people it could make sense to tap into the equity that’s tied up in their homes. But for many, downsizing to free up the cash is not an option – maybe it’s too expensive, or they have emotional or physical ties to their homes and neighbourhoods. That’s where equity release, where suitable, could offer a solution.”
He said that for a retiree with a home worth £327,000 and an outstanding mortgage of £33,627, if they released 30% of their home’s value, they could get over £98,000. If they use that to pay the mortgage, they would still have £64,000 remaining.
“Equity release is still a loan [that] accrues compound interest, but it doesn’t need to be repaid until you pass away or move into care permanently. This can free up retirement funds for those living on a pension income that’s being eaten into by mortgage payments.
“Even if you chose to make repayments to cover the interest on the equity release loan, these could still be considerably less than the repayments on a standard mortgage,” Screeton added.
