Home owners face a poor old age

May 9, 2016 by Brendan

Home owners

According to the latest research, those who own their own property are more likely to end up much worse off when they retire than people who rent their home.

Data released from the National Institute for Economic and Social Research (NIESR) has indicated that if a person owns their own home now, they are more likely to end up with less money than those who rent.

Although the UK as a nation struggles to get onto the property ladder as an investment, those that do so will pay less into their pension or savings than those who rent. Speaking to the Financial Times, the director of macroeconomics from NIESR, Angus Armstrong, said:

“From an individual’s perspective, buying a house is an investment; in aggregate, without an increase in supply, buying a house is an [economically unproductive] transfer of wealth.”

The NIESR informed the Financial Times that owning a property would often mean that a person would save 15% less towards their pension than those who rent. This means that although you will have your home as an asset, you will have less to live on in retirement.

As house prices are rapidly rising, more people struggle to get onto the property ladder, with more borrowers needing help from friends and family to buy a home. As the average income is just £24,300, according to Resolution Foundation, affording a home is more difficult than ever.

A CeMAP qualified mortgage adviser can help borrowers to find a mortgage which allows them to overpay, perhaps reducing their mortgage term by years.