by Mark Johnston
More Home Owners Enter Retirement in Debt.
With escalating costs for basics such as food, energy and petrol, it is no wonder that those wanting to retire have much less to live on than they originally anticipated.
Jonathan Moore, director of easyroom.co.uk, states that “the finances of those about to retire and those in the early stages of retirement have taken a serious knocks over the last few years”.
Recent figures from the Prudential have shown that around one in five people who intend to retire in the current climate may still have debts in the region of around £31,000.
Although Prudential also found that while 43 per cent of people will retire in debt this year, this is still a fall from last year when the figure was 50 per cent.
This debt is usually spread over a mixture of credit cars, bank loans, overdrafts and mortgages.
Delroy Corinaldi, a director of stepchange, a charity, said “we have seen a 44 per cent increase in the number of over sixties contacting us with problems in paying their mortgages”.
Other figures from Key Retirement Solutions, who provide equity release mortgages, suggests that pensioners debt problems are severe and many are struggling with huge mortgages.
Despite the fact that we are all expected to live and work longer, it is still difficult to remortgage in later year.
Just five years ago mortgage lenders offered loans to people who were well past the age of retirement, however new rules brought in by the mortgage market review, which is intended to stop another financial crisis, now mean that many of these mortgage options for those heading towards retirement have all but dried up.
Pensioners with debts are putting an average of £198 a month towards their debt repayments, this amounts to around 13 per cent of their average income.
Research has also revealed that more than 100,000 people over the age of 65 are still paying off their mortgages.
A survey has shown that retirees with debt expect it to take just under 4 years to clear the money they owe, however more than one in ten believe they will never be debt free.
With pensioners incomes forecasted to fall in the next few years, it is therefore vital that those approaching retirement with debts plan for a way to deal with them.
Jon King, More 2 Life’s managing director, said “there is a potential mortgage timebomb ticking with pensioners paying home loans way past traditional retirement ages”.
Data from Castle trust has shown that 3.2 million home owners plan on downsizing properties in order to help fund retirement.
However, with the housing market in such a sorry state, downsizing is not a straightforward process therefore many older people find themselves needing to find short term accommodation between selling and buying a new home.
As older Britons feel the financial pinch it appears that the number of pensioners looking for short term flat shares is up by more than a third.
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