Pensioners using equity release to pay mortgage

April 21, 2009 by Brendan

CeRER

News

According to an equity release specialist, over a third of pensioners in the UK are still paying off their mortgage.

The figures shows that around 33 per cent of pensioners aged 65 or over still have a mortgage to pay off. Last year, the number of pensioners using equity release schemes to be able to pay their outstanding mortgage debt soared by an extra 38 per cent according to KRS (Key Retirement Solutions) with the avergae mortgage burden being around £43,000.

Across the entire mortgage market for over 65’s the average outstanding mortgage was a whopping £104,000.

Part of this trend is being attributed to failed mortgage endowment plans from the 80’s but also that with the rise in house prices, people have had to take on additional mortgage debt stretching beyond their retirement age when they moved house.

Chris Tapp, director of charity Credit Action, said: “It used be assumed that the economic life-cycle was such that you borrowed when you were younger to leave you debt free and well set up to enjoy your retirement. These figures dramatically demonstrate how skewed this picture has become in recent years as people have been forced to borrow more and borrow for longer to afford property.”

In order to arrange a mortgage for this vulnerable age group and release equity from a property, mortgage advisors must have taken their CeRER training (Certificate in Regulated Equity Release). CeRER training is becoming more and more popular because of rising demand for this sort of mortgage.