Stephen Lowe: “Taking pension money early may not leave enough time to build up the value of the fund again.”
Some 320,000 homeowners aged 51 to 65 are planning to use money from their pensions to pay off their mortgages, research from Just has found.
According to figures from the Office for National Statistics and Just’s research, 316,049 homeowners with mortgages are planning to use a pension lump sum or income to pay off their mortgage.
Of the approximately four million homeowners in this group, fewer than two-thirds are planning to clear their loans with regular monthly payments, while 365,432 are planning to use inheritance to pay off their home and similar numbers are planning to use savings and investments.
Meanwhile more than a quarter of a million people (285,714) are planning to sell their homes altogether.
The research also found almost a quarter (23%) of homeowners in the 51-65 age group are expecting to continue making mortgage payments after age 65, with a quarter of those still expecting to make repayments beyond the age of 70.
Just group communications director Stephen Lowe (pictured) 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 mortgage 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.”
Lowe urged anyone thinking to take pension money early to consider the implications on their retirement income carefully. “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,” he said.
Earlier this year research by Prudential found the proportion of people retiring with debt in the UK was at its highest level in seven years, with one-in-four (25%) retirees set to do so in 2017.