One in six UK pensioners are still paying off their mortgage, putting increased pressure on retirement income, according to a survey from Scottish Widows Bank.
The bank said that 1.76 million pensioners in the UK have outstanding debt on their homes, each with an average balance of GBP45,313, making a nationwide debt of almost GBP80 billion. One in three owe more than GBP50,000 and one in ten more than GBP100,000.
The bank said that a significant number of people are using retirement savings to pay off their mortgage, putting added pressure on their fund. The study also showed that many pre-retirees – those aged between 55 and 65 – are a long way from paying their mortgage off, suggesting that the trend is likely to continue.
Murdo McHardy, head of product development and marketing at Scottish Widows
Bank, said: 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.