Tens of thousands of retirees have resorted to taking out mortgages – up two percent from the previous year.
UK Finance said 33,840 people over 55 took out mortgages during the three months ending September.
Borrowing amont the over 55s totalled £5.2bn, a rise of of 9.7 per cent during the same period.
The type of mortgage taken out by the over 55s has changed. Only 5,830 lifetime mortgages, which use the value of a home’s equity to release cash, were taken out, a drop of 18.8 per cent.
The number of much older borrowers taking out a mortgage rose, with 9,010 borrowers over the age of 65. They took out a total of 1,230 mortgages, this is an increase of 17.14 per cent on last year.
Clare Stinton, head of workplace saving analysis at Hargreaves Lansdown warned how taking mortgage debt into retirement raised income requirements and can complicate planning.
“Retirement used to mean waving goodbye to the mortgage that’s been tailing you for the last three decades and unlocking income to indulge in life’s pleasures during your silver years.
“But surging house prices mean the retirement landscape is changing. The expectation of a debt-free retirement is giving way to a reality where many retirees face lingering mortgages, so they need higher day-to-day income to manage their living costs and maintain their quality of life – and this means pensions savings need to be higher.”
Stinton said later-life borrowers with mortgages extending into retirement must consider how they and their partner will manage payments if illness or worse occurs.
“Can each partner shoulder the mortgage alone? This critical question can shape how they draw pension income. For instance, opting for single-life annuities may leave a surviving spouse without financial support to cover mortgage payments.”
Are you retired and have had to take out a mortgage? Share your story by emailing samantha.downes@reachplc.com
