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ERC: Half a million to retire owing money on mortgages

28 August 2012

New figures from the Equity Release Council show up to half a million people in the UK could still owe money on their mortgages when they decide to retire.

Data collected by the body from 2,000 individuals indicated an average of £52,446 is going to be left outstanding on their mortgage.

Director-general of the Equity Release Council Andrea Rozario stated equity release could be set for a boom in demand, due to the fact it could enable homeowners who find themselves in this position to unlock money from the value of their house.


Some 16 per cent of respondents to the research in the 35 to 44- year-old age group expect to retire with £43,345 left to repay on their mortgage, while a quarter (23 per cent) of those aged between 55 and 64 believe they will retire owing an average of £65,955.

The Equity Release Council also found that 17 per cent of 45-54 year olds believe they will still owe £48,037 on their mortgage when they give up working for a living.

"Many people find that due to unforeseen circumstances they enter retirement with a small amount of debt but the fact that over 400,000 people expect to still be repaying their mortgage when they retire is shocking," said Ms Rozario, who added the growing trend in the UK towards people buying homes later in life and remortgaging them on a regular basis is going to have an impact on the type of retirement that people can expect to enjoy.

It was shown in the report that even though close to three-quarters of homeowners (73 per cent) are planning to use housing equity as part of their later life finances, many are sure to use the money raised through the purchase of such products to solve the problem of repaying a mortgage or other debt in retirement.

Uses for cash

Those who find they have enough money to survive in their retirement can use the cash they can access via equity release to boost their quality of life in a number of different ways, which could include to pay for improvements to a home that make it easier for older people to get around.

This could prove to be a cost-effective way to spend the money in the future as well, as it is likely to extend the length of time an individual can remain in their own home without having to go through the stressful and upsetting process of moving to a new property.

Others could choose to spend the money they raise through equity release schemes on a once-in-a-lifetime holiday abroad, perhaps on a cruise ship around the world, that could give them memories they will cherish for the rest of their lives.

Travel is on the minds of a lot of older people and developments in technology have made it easier than ever to see the world, with age not holding many back from pursuing a dream holiday around the world in their later years.

Homeowners could also use equity release funds to help out family members who are in need of an injection of funds, perhaps to pay for their university degrees or to put down a deposit for the purchase of a first home.

Other options

Ms Rozario pointed out that there are other options on the market for those considering equity release plans, but they may not be suitable for individuals in some situations.

"Downsizing might be the answer for those with more valuable homes, but many 55–64s will struggle to repay over £65,000 worth of borrowing and still buy another property," she said, noting that equity release could give these people the opportunity to "repay their borrowing and thus ease their financial burden while remaining in the homes".

Earlier this month, the Equity Release Council announced that is had made two new appointments to its standards board - Jim Dredge, who previously worked for the Financial Services Authority and Lloyds TSB - and experienced journalist Liz Barclay, who is currently chair of the Camden Citizens Advice Bureau and non-executive director for the Financial Services Compensation Scheme.

Page last updated: Monday 10 June 2019