There are 3.3 million over 55s who have yet to repay their mortgage, according to equity release adviser Key, which carried out the poll.
It quizzed a group of over-55s and found, of those who still had a mortgage, 16% planned to repay it ahead of retiring but thought the rising cost of living would make this harder. Meanwhile, 13% said it would take them longer.
Key found two in five (40%) over-55s had already repaid their mortgage.
The study, which was carried out over two separate periods last year – April to June 2022 and then October to December, demonstrated the impact of high inflation on older homeowners.
Key said it showed a ‘growing realisation’ amongst over-55s that changes in the mortgage landscape would impact their plans – especially following the volatility after the mini-budget in September.
Indeed, of those quizzed between April and June 44% said the current environment had no impact on their plans to repay their mortgage.
Yet, fast forward six months to the research period which coincided with the fall-out from the mini budget, when mortgage rates soared, this figure fell to 28%.
Researchers said this showed the impact of rising inflation, tightening affordability criteria limiting the ability to secure new/better deals and rising household bills saw more people doubt their ability to stick to their repayment ambitions.
Longer-term challenge
Will Hale, CEO at Key, said: “The cost-of-living crisis is no longer a short-term challenge but one that has far longer implications for many – especially those who are older and looking to pay off their mortgage.
“It is extremely worrying that almost 900,000 over-55s are going to find it tougher to repay their borrowing as they work hard to deal with rising household bills alongside the need to save enough to be able to enjoy a secure and fulfilling retirement.
“With a larger proportion of their income being used for utilities and groceries – expenses which have been particularly hard hit by inflation – many over-55s are considering how they can cut back in other areas or even return to work in order to better manage their finances.”
Could equity release help?
Hale urged anyone considering equity release as a solution to their mortgage repayment challenges to get specialist advice before proceeding.
This was because of the flexible nature of products such as equity release.
He added: “With the ability to serve interest and/or make ad hoc capital repayments , older borrowers can reduce their outgoings while still carefully managing their borrowing.
“Also, with fixed early repayment charges which can disappear completely in as little as five years on certain products, a lifetime mortgage no longer has to be a product for life.
“As circumstances change, for example of the back of an inheritance, customers may find themselves able to fully repay their equity release loan or alternatively remortgage to another product that may offer better rates or features than those available today.”
What if you are struggling to pay your mortgage?
The advice for anyone who fears they may be in danger of being unable to pay their mortgage during these difficult times is to speak to their lender.
There are likely to be ways the lender can help you better manage your repayments if you are struggling and they are obliged to help you navigate these options.
You can find out more about what to do if you are facing mortgage difficulties here.
