Too many over-65s are dying with a traditional mortgage they haven’t paid off, creating problems for loved ones, according to Key Advice.
According to the equity release advisor, approximately 26,000 people over 65 with outstanding mortgages died last year, analysis of government figures shows.
Key said this creates potential problems for all partners and the beneficiaries of their estates who must service the outstanding mortgage or continue payments.
About 28% of inherited estates include properties with an outstanding mortgage, Key said. It is estimated that more than 500,000 retirees have an outstanding mortgage.
Key said survivors are at risk of foreclosure if they cannot make payments on the outstanding mortgage. Most mortgage lenders offer grace periods of three to six months after the death of the mortgage holder, but interest continues to accumulate.
Options for survivors include remortgaging or selling the home and downsizing.
Key Advice chief executive Will Hale (pictured) said: “Later-in-life customers shouldn’t have to worry about the risk of repossession, but that is a potential risk as the number of over-65s with mortgages continues to rise and they need solutions that allow them to make payments and continue to manage their borrowing costs, whilst having the flexibility to maintain their standard of living even when circumstances such as ill health or a drop in working income arise unexpectedly.
“Regular mortgage brokers must recognize the innovation that has taken place in the lifetime mortgage sector and ensure that all options are considered when dealing with over-50s customers.”
In September, trade body UK Finance called for a call Lending later in life becomes ‘more mainstream’arguing that many of its members do not want the sector to be “further separated from the rest of the market”.