Over-55s homeowners are sitting on an average £311,000 in equity with one in four owning £400,000 or more but they are becoming increasingly worried about their retirement income, new research from Key Later Life Finance shows.
Its nationwide study found nearly two out of three (64%) of over-55s owns their home outright with a further one in seven (14%) owning their home with a mortgage. The average amount owed on home loans by over-55s is £69,000, the research found.
However, the pressures of the ongoing cost of living crisis have sent worries about whether their retirement income will be enough to live on soaring. Around 69% of over-55s questioned are worried to some extent with 22% admitting being extremely or very worried.
Around two-thirds (66%) are worried to some extent that they will have to run down their savings while 41% are concerned about the risk of having to take on unsecured debt such as loans or credit cards.
Key is warning that the need to balance saving money into a pension for retirement, coupled with cost of living pressure, is a major cause of concern for many over-55s homeowners and is advising them to consider later life lending solutions that may not be provided by mainstream lenders – such as Lifetime Mortgages, Payment Term Lifetime Mortgages and Retirement Interest Only mortgages.
The research found around one in eight (12%) with mortgages still owe more than £150,000 compared with the average £69,000.
Nearly two out of three (65%) of them are worried that paying their mortgage in retirement will have a major impact on their retirement income while half (48%) worry about being able to pay their mortgage off and 47% are concerned about keeping up with repayments.
The study found around 11% of all homeowners plan to use Lifetime Mortgages or Retirement Interest Only mortgages but less than half (44%) are very aware of their later life borrowing options. New product options, such as payment term lifetime mortgages and interest served lifetime mortgages could give homeowners additional flexibility to manage existing mortgage borrowing whilst protecting pension savings.
Key believes the full range of specialist later life mortgages can provide solutions and safeguards to many of the needs of older homeowners, that a typical remortgage of an Interest Only Mortgage or Capital and Interest mortgage may not provide. But it stresses that specialist advice is essential. Key later Life Finance has already updated its advice approach to cover the full range of later life product options as well as checking against available mainstream mortgage options where affordability allows. Chris Bibby, Managing Director at Key, said:
“The pressures of the cost of living crisis may be easing but it is leaving a legacy for over-55s homeowners who have seen their finances suffer at a crucial time for retirement planning.
Despite sitting on considerable property wealth at an average £311,000 many homeowners are very worried about their retirement income and whether it will last the duration, let alone deliver the standard of living they want.
Over-55s should seek specialist advice on the growing number of options available to them, which could provide a better outcome than those offered by High Street lenders. There are more flexible ways to manage mortgage debt in retirement that could provide better outcomes from many homeowners to live the retirement they want”
