People Have Home Owner Loans For Longer
It used to be the case where a person would finish paying their home owner loan or mortgage several years before they retired, giving them time to build up a nest egg of savings to help them through retirement, with the money they were no longer using for their loan repayments.
However, new research has found that the gap between paying off a home owner loan and retiring, has shrunk significantly in recent years and some borrowers are now even entering retirement with an outstanding balance remaining on their loan.
The research, conducted by Santander, has found that as a result of having a loan for longer and saving for a shorter time, many individuals are being forced to delay their retirement for a number of years, while they build up a savings pot, or in some cases, clear their existing loans.
Back in the 1960’s the average time between paying off a home owner loan and retiring was 21 years, however this figure has now fallen to less than 10 years, for the typical home owner who took out their loan within the last ten years.
Many home owners are now being forced to continue working through their retirement years and many are using the equity in their home to live on, by taking out an equity release loan, thereby leaving them with loan debts for their entire life and reducing any inheritance for their family.
Reza Attar-Zadeh of Santander savings said “For many people the period when they are still in employment but mortgage free, represents a golden opportunity to get some cash in the bank in preparation for retirement.”
“This window has more than halved since the 19060’s and the opportunity to save is getting smaller. Our advice is to start saving as early as possible, even if they put away small amounts every week or month.”
