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Homeowners set to be still paying their mortgage in retirement

Those heading towards retirement now face the prospect of still paying off their mortgage well into their retirement. A report by Saga found that almost a million homeowners in the UK are still paying off their mortgages. Many of these people are facing repayments in what should be their twilight years due to shortfalls in their endowment policies.

And it’s not set to get any better for future generations, with recent news that banks including Santander would soon offer ‘lifetime mortgages’. This means that when the homeowner dies, the home is sold with the cash used to pay back to the lender. Leaving many people starting out on the housing ladder now, facing the prospect of still making mortgage payments in their retirement.

The prospect of never owning your home outright in retirement is a scary prospect for many people so it comes as no surprise that according to a study a quarter of parents are looking at spending money they had originally set aside for their children’s inheritance in retirement. The survey conducted by IntotheBlue found that those yet to retire, aged between 55 and 64 were more likely to spend their children’s inheritance on themselves, maintaining property or paying off debt.

They surveyed 1000 people, male and female aged over 55 and found that a quarter of men (25%) opted for spending their children’s inheritance, enjoying their retirement or releasing some financial burdens compared to only 22% of women.

Speaking about the findings Jim Maitland from Into the Blue said:

“Working full time for 45+ plus years can be tiring and hard. The reward at the end of your working career is retirement and enjoying any money you may have saved during that time. Many people still keep their savings for their children to enjoy, however there are now more and more people spending this money on enjoying their retirement rather than passing it on to their families who a lot of the time will be hit by tax.“

It seems as poor interest rates on savings underpayment from endowment polices are seeing the older generation reconsider what they are able to leave behind for their children to inherit upon their death, especially when it comes to paying for their home.

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