320,000 to pay off mortgage with pension cash

Of the approximately 4 million homeowners in this age group with mortgages, under two-thirds are planning to clear their loans with regular monthly payments, leaving hundreds of thousands relying on other sources of funds to repay their home loan.

23% of the homeowners aged 51-65 – nearly a million people – are expecting to continue making mortgage payments after age 65 with one-in-four still making repayments beyond the age of 70.

The research also shows that as people get older they become less confident their regular payments alone will clear their mortgages – seven out of 10 of those aged 51-55 expect regular payments will clear the debt compared to only half of those aged 61-65.

Previous Just research found that around four in 10 people are forced to give up work earlier than they expected due to factors outside their control, most commonly ill health or redundancy.

Stephen Lowe, group communications director at Just, said: “Retirement looms ever larger as people head through their 50s and the good news is that many expect to have finished making mortgage repayments by the time they step back from work.

“But, under two-thirds expect to clear their mortgages purely through making their regular monthly payments alone. That leaves hundreds of thousands of people who expect to use other sources of funds such as savings and investments, pensions or inheritances to clear the loan and some are planning to sell their house.

“The older they are, the more likely people are to look to other sources of funding to clear the mortgage – such as pensions or inheritances.

“It will depend on people’s own circumstances whether doing so is financial sense or financial folly. We would urge anyone thinking of taking pension money early to consider the implications on their retirement income carefully.

“Planning for retirement has to leave some room for manoeuvre. Taking pension money early may not leave enough time to build up the value of the fund again through working, leaving people short of income when they are no longer able to earn.”