More than 500,000 people are planning to repay outstanding mortgage balances with the money from their pension pot, according to research by Partnership, a specialist insurer.
Most of the UK population, around 71 per cent, will pay off their mortgage by making monthly repayments. About one quarter will use the additional lump sum contributions to pay off their outstanding balance, while almost 10 per cent will use their retirement pot to pay off their mortgage. An inheritance is going to be used to pay off the mortgage, according to eight per cent of property owners, with seven per cent unsure how they will finance their outstanding balance.
The managing director of retirement at Partnership, Andrew Megson, said:
“While it is still shocking that over half a million people in the UK intend to use all or part of their retirement savings to repay their mortgage, it has fallen from over 1 million in 2014.”
According to Megson, this suggests that although many people will be allowed to have free access to their pension fund, they appear to be considering a more enlightened view of how to use the money, rather than spending it all on just one expense, like the mortgage. Many people appear to be considering how to pay off their mortgage debt before entering into retirement. Their are alternative ways of paying off a mortgage before retiring, which a qualified mortgage adviser who has taken a CeMAP course could help with.