Over one million over-50s could have to sell home to pay mortgage

lovemoney.com
Over 50s could have to sell home to pay mortgage
Over 50s could have to sell home to pay mortgage



There are 6.3 million over-50s with an interest-only mortgage who bought an endowment to clear the lump sum at the end of the term, according to new research by Saga. However, two-thirds say the endowment will fall short.

The average mortgage debt for this group is around £42,000. And Saga says a third of could need to sell their home to make up the shortfall.

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How people plan to pay off mortgage

Two-thirds of over-50s are planning to cover the deficit with a combination of other savings and investments, by paying off the lump sum each month or by extending their mortgage to give them more time. Recent research by specialist insurer Partnership found that around half a million people were planning to use their pension, which could leave them facing the prospect of selling their home later on to fund their retirement.

For the remaining third without significant savings or investments, downsizing to another property is one very obvious way to pay your mortgage off. It could also release money to gift to family now as a way of avoiding Inheritance Tax.

And while it ultimately means if you were planning for your family to inherit your home they'll receive less, at least the mortgage will be clear.

Another option is equity release, where you continue to live in the home but you sell a share to a company in return for some of its value.

Be aware that this can be a very expensive option, particularly if you live for a long time, as you will pay interest on the equity you've borrowed.

And the equity you release will be less than the value of the share of your home you sell.

Having said that, it can be a very viable solution for some people. Just make sure you understand what you're getting into and use a regulated company. For more, read our guide Equity release pros and cons.

If you are really struggling, contact your lender as soon as possible to discuss your options.

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