People are asked what they know about mortgages
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A quarter of older households still rent or have a mortgage, with many having limited savings to cope with the soaring cost of living. Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warned that many people will not be able to clear their mortgage before they retire.
She said: “The days of retiring mortgage-free are over for many with a quarter of older households still having to pay either a mortgage or rent post the age of 65.
“Such costs can be sizeable and can add a huge extra chunk to any money you need to put away for your retirement, especially for those who continue to rent.”
She warned that the option to downsize may not be as feasible as it first appears.
The economics expert said: “Pensioners facing a shortfall in retirement income often talk about downsizing to a smaller property as a way of freeing up some extra cash.
“While it may seem a good idea a few years down the line, when it comes to it many older people cannot bear the thought of leaving a home they may have brought up family in or have a close friendship network nearby.
“This reluctance can be shown in that less than one in ten older households had moved home in the past three years, and only three percent planned to move home within the next six months.”
Government figures showed that in 2020 to 2021, social renters aged 65 and over paid 27 percent of their income on their rent, including housing support, and 34 percent, excluding the benefit.
Older private renting households spent 38 percent of their household income on rent when housing support was included, and 48 percent when it was excluded.
Older mortgagors meanwhile spent 31 percent of their household income on their mortgage.
More than half of older households were found to be living in homes that had an Energy Efficiency Rating of D or below.
The pressures faced by older people could be worsened by the cost of living crisis.
Ms Morrissey said: “The issue could become more acute as the cost of living crisis continues to bite and the price of essentials such as food and utilities continues to sky-rocket.
“Older households tend to spend a larger proportion of their income on these items so are particularly badly affected.
“As energy bills in particular soar, older households may struggle with around half of their homes having an energy efficiency rating of D or below and with almost one fifth of older households saying they have no savings they face a very difficult few months ahead.”
Some 850,000 older Britons could be missing out on extra help with their living costs, through Pension Credit.
The benefit is for those on lower incomes and can go towards rent and housing service charges.
The support is separate from the state pension and a person can receive the help even if they have other income, savings, or their own home.
People who claim pension credit are granted access to other schemes such as housing benefit and council tax discounts, and free TV licences for over 75s.
Britons can check their eligibility for Government benefits online.
Tools are available hosted by Turn2us, Policy in Practice, and entitledto.
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