Key Advice has highlighted the growing financial risk facing older homeowners, estimating that around 26,000 people aged over 65 died last year while still holding a conventional mortgage.
According to Key, the issue can create financial strain for bereaved partners and beneficiaries who must either continue making repayments or settle the outstanding balance.
Industry data revealed that around 28% of inherited estates include properties with mortgage debt, and over 500,000 retired people still have mortgages outstanding.
Where a surviving partner cannot maintain payments, there is a risk of repossession, even though most lenders allow a grace period of three to six months during which interest continues to accrue.
Key said that later life lending options, including modern lifetime mortgages, should be considered earlier in financial planning rather than only as a last resort.
The company has called for advisers – including mainstream mortgage brokers – to ensure they review the full range of solutions available and, where necessary, work with referral partners to deliver suitable outcomes under Consumer Duty requirements.
Will Hale, CEO Key Advice & Air, said: “Financial wellbeing is at the core of successful long-term financial planning and particularly important for over-65s with outstanding mortgages.
“Advisers need to continue to engage with older customers, and their families, and consider all options in order to deliver good outcomes in line with Consumer Duty obligations.
“Later life customers should not be worrying about the risk of repossession but that is a potential risk as the number of over-65s with mortgages continues to rise and they need solutions that enable them to make payments, to continue to manage their cost of borrowing, whilst allowing for flexibility to maintain their standard of living even when circumstances such as ill health or reduction in employed income may happen unexpectedly.”
He added: “Mainstream mortgage advisers need to recognise the innovation that has taken place in the lifetime mortgage sector and ensure that all options are considered when dealing with over 50s customers.
“Payments must be affordable, not just according to lender eligibility but with individual risk appetite in mind, and customers must not be placed in products which may be unsuitable for their current circumstances or foreseeable future changes in their situation.
“Customers need to be able to sustain their financial commitments and security/certainty can be a key consideration, often meaning that the product offering the lowest headline rate may not always be the most appropriate.”
