More than half a million pensioners in the UK have not yet paid off their mortgages, according to research from over-50s specialists SunLife. The findings highlight the financial strain many retirees face, with mortgage repayments consuming a significant portion of their household income.
SunLife’s third Life Well Spent report surveyed more than 2,000 people over 50, revealing that 23% of homeowners still have an outstanding mortgage, owing an average of £67,478. While most of these homeowners are still working, 14% of those with remaining mortgages are retired, meaning around 494,000 pensioners are still making mortgage payments.
On average, retired mortgage holders owe £63,643, with monthly repayments of £766. Given the typical pensioner household income of £31,064, this means almost a third of their income—£9,192 annually—is being spent on housing costs.
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 1 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.”
Many pensioners are reluctant to downsize, with SunLife’s research showing that nearly half (48%) believe they won’t need to move, while 21% fear they may have to downsize despite wanting to stay in their homes.
Equity release could offer a solution for some retirees who want to remain in their homes while accessing funds tied up in property. A lifetime mortgage, the most common form of equity release, allows homeowners aged 55 and over to unlock tax-free cash without the need to move, with repayment only required when they pass away or enter long-term care.
“If a pensioner with a home worth £332,867 and an outstanding mortgage of £63,643 released 40% of their home’s value, that would be just over £133,000. After the mortgage has been cleared, this still leaves them almost £70,000 to spend as they see fit,” Screeton explained.
While equity release is still a loan, Screeton noted that for pensioners living on a modest income, eliminating monthly mortgage payments could provide significant financial relief. “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.”
