The cost of living crisis is a concerning and long-term problem for those trying to pay off their mortgage, especially over-55s who are already having difficulty saving enough for retirement.
Higher mortgage rates and rising costs of living are making it harder for some mortgagors to afford their mortgage repayments. This could lead to some households defaulting on their mortgage or having to cut back sharply on their spending, posing a significant risk to their financial stability.
More than 3.3 million over-55s in the UK still have mortgages to repay and the cost of living crisis is making it more difficult for them. According to new research, 30% of this cohort feel that their ability to repay these loans is hindered due to the current climate, equating to around 879,000 people with potentially derailed mortgage plans[1].
Of those who have yet to pay off their mortgage, 16% say they plan to do so ahead of retiring but are concerned that it may be harder due to the cost of living crisis. While 13% suggest it will take longer, and 1% worry about their investments not performing as expected.
Those who have already paid off their mortgage, amounting to 40% of over-55s in Britain, are not exempt from financial worries either. The research identified that 4% admitted borrowing could be a necessity in order for them to secure an adequate income during retirement and maintain a healthy standard of living.
The research also highlights that the proportion of people planning to pay off their mortgage before they retire has risen to 19%, but it is likely some have chosen to delay leaving work in order to do so. Additionally, there has been a 5% increase in those who say they will still be able to satisfy their repayment goals despite the difficult climate, although it could prove more challenging for them.
The research identified that almost 900,000 in the over-55s age group will find it tougher to service their borrowings, with the rising cost of utilities and groceries taking a larger portion of their income. For those already living frugally, pressure could soon become intolerable.
The cost of living crisis has been an increasingly long-term challenge for those looking to pay off their mortgage, especially for over-55s. This age group is already struggling to save enough money for retirement and this situation can put them into further financial difficulty. It is important to be aware of the potential issues that could arise as a result of the cost of living crisis and how to prepare for them.
A carefully designed financial plan can give you the freedom to do even more of the things you want – and maybe even others you never thought possible.
To discuss any of the issues raised in this article, please contact us. Further information can also be found at gov.uk.
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