Nearly half a million British pensioners are still grappling with mortgage payments amid high interest rates, according to recent research by over-50s experts SunLife.
Their ‘Life Well Spent’ report reveals that five per cent of retirees have yet to pay off their mortgages, with an average outstanding debt of over £60,000.
Around 494,541 older people are still burdened with paying monthly mortgage payments.
On average, these retired mortgage holders still owe £63,643, which is costing them £765.75 a month.
Given that, on average, a pensioner’s household income is £31,063.84, meaning almost a third (30 per cent) of their entire income is still being spent on housing – £9,192 a year.
Around 494,541 older people are still burdened with paying monthly mortgage payments
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Mark Screeton, CEO at SunLife, said: “According to our research, the average homeowner pensioner has a home worth more than £330,000, but a household income of just over £30,000.
“This means that the vast majority are cash poor and property rich, and while most own their homes outright, around one in 20 still have a mortgage.
“For those people, a huge chunk – almost a third – of that relatively modest income is still being spent on housing.
“It could make sense for some of these people to tap into that equity that is tied up in their homes. But for many, downsizing to free up the cash is not an option – often it is too expensive, or they are emotionally tied to or physically dependent on their homes.”
According to SunLife’s research, the vast majority of retirees say they love their home, and they never want to move.
And while half (48 per cent) say they do not think they will have to, more than one-in-five say they really do not want to leave their home, but fear they will struggle financially if they do not downsize to a cheaper property.
Equity release is one option retirees a consider. This is a tax-free way for homeowners aged 55 and over to release some of the cash tied up in their home, without moving house.
Homeowners normally release between 20 per cent and 60 per cent of the value of the property. The older they are, the more they can release.
Screeton added: “Equity release is still a loan, but one of the benefits for those pensioners living on a fairly small income that’s being eaten into by mortgage payments, is that they wouldn’t have to make those monthly mortgage payments anymore.
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“Even if they chose to make repayments to cover the interest on the equity release loan, it could still be less than the repayments on a standard mortgage.”
Another option is downsizing. Joanne Couch, Managing Director at My Future Living, said: “Downsizing is about finding the perfect balance, a home that fits your needs today and allows you to live the retirement you’ve always dreamed of. For those considering downsizing, renting in retirement is becoming increasingly popular.
“Renting after selling up frees up capital, as well as time as people don’t need to maintain and clean a large property. Retirement apartments are designed for security, convenience, and community.
“Downsizing in 2025 can offer financial freedom, more leisure time, and a simpler, more enjoyable retirement.”
Joanna offers five tips for those considering downsizing in 2025:
- Assess your housing needs – Evaluate what you truly need in a home. This can change as people age. Consider location, size, and features that will support your lifestyle and future needs.
- Explore retirement rental options– Renting in retirement offers flexibility and can remove the burden of property ownership, allowing you to focus on enjoying life.
- Plan financially – Consult with a financial adviser to understand the implications of selling your home, releasing equity, and reducing inheritance tax liabilities.
