A recent report details the levels of people retiring in the UK with debt issues. 1 in 4 people are reaching retirement age with significant levels of debt. One of the reasons behind this disturbing number is the attitude to debt of the baby boomer generation and specifically in relation to Mortgage debt, both residential and on BTL properties.
Historically those of the population who were homeowners reached retirement age with no mortgage outstanding, especially in relation to their main residence. This is now no longer the case. Due to changing attitudes to debt and more recently, the credit crunch many people who are reaching retirement age still have significant outstanding amounts on a mortgage.
This has become the case due to the rise over the last 15 years of the financial tactic of raising capital from the residential property to finance other parts of the family life. The real problem has arisen where the laon has been secured using a mortgage on an Interest only basis where there is no repayment vehicle in place.
To put bluntly, people are reaching retirement age with a significant mortgage debt with no means to pay the loan. This causes an issue in two respects, one how to pay the capital and 2 as the loan is not paid, how to pay the monthly interest element.
These issues are apparent at a time where income in retirement in relation to what was the income pre retirement is in a serious shortfall. These factors are leading to more people at retirement using an Equity Release plan to pay off a capital loan on their main residence. As with all such transactions professional, specialist, independent advice should be sought from an Equity Release Professional.
Mick Bradley
Managing Director
07766 257464
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