New research from Scottish Widows Bank reveals that one in six, or 1.76m, pensioners in the UK have an outstanding mortgage on their home, each with an average debt of £45,313, making a nationwide debt of almost £80 billion. What is more, one in three owe more than £50,000 and one in ten more than £100,000, putting increased pressure on retirement income.
* 1 in 6 retirees (1.76m) still have a mortgage
* 1 in 3 of those (500,000) with a mortgage owe more than £50,000
* Average outstanding debt is £45,313
Murdo McHardy, Head of Product Development and Marketing at Scottish Widows Bank, says: "Our research shows that, by the time they come to retire, a significant number of pensioners still have a mortgage outstanding on their property, adding pressure to their hard-earned retirement fund."
The study also shows that many pre-retirees (aged 55 to 65) are a long way from owning their own home, suggesting that the trend of retirees still being burdened by monthly mortgage repayments is likely to continue. Of those in this age bracket who are working full time, over half (51%) still have a mortgage with an average debt of £61,856. People that are due to retire in the next few years still have a debt outstanding, and this appears to be linked to the amount of income they receive. Findings reveal that four in ten baby boomers (those aged 55-65) who have an annual income over £40,000 still have a mortgage, compared to only 18% of those with an annual income of less than £20,000. Over half of people (56%) with an income over £40,000 have more than £50,000 debt outstanding, twice as many as those with an income of less than £20,000, where only one in five have more than £50,000 debt outstanding.
Murdo McHardy continues: "It is of course a little surprising that people who have a higher income also tend to have larger liabilities. But it is important for those people who will be reaching retirement in the next few years, and still have debt outstanding on their mortgage, to consider how best to prepare themselves for the eventuality of having to juggle their debts on a reduced income when they stop working. "With more and more people taking out mortgages later, and paying them off later, we are seeing many people turning to the equity in their home as a method of providing income in retirement. The knock-on effect of getting on the housing ladder later is that money that could have been put into a pension is being used on monthly mortgage payments. This trend is only going to continue to grow for as long as first time buyers struggle to get onto the housing ladder before the age of 35."
