Thousands of retirees are dying before paying off their mortgages, leaving grieving families to deal with the financial fallout.
New research shows around 26,000 people aged over 65 died last year still owing money on their homes, forcing loved ones to cover repayments or sell properties to settle the debt.
More than half a million retired people are still repaying mortgages, analysis frim Equity release firm Key Advice found.
When they die, their partners or families are left to deal with the debt, often having to take over the repayments or pay off the full balance to avoid losing the property.
Most lenders give families a short break of three to six months after the borrower’s death, but interest keeps building during that time, adding to the strain.
Around 28 per cent of inherited properties still have an outstanding mortgage, according to research by Key Advice.
Families who inherit these homes often face a difficult choice between taking out a new mortgage in their own name or selling the property and downsizing.
Thousands of pensioners die with outstanding debt as families left to foot the bill
| GETTYThe findings highlight growing concern over the number of people reaching retirement without paying off their mortgages.
Families coping with inherited mortgage debt can either refinance or sell the property to reduce costs. Key Advice says lifetime mortgage products should be considered much earlier in retirement planning, rather than only as a last resort.
The firm adds that financial advisers should explore all available options for clients over 50, as Consumer Duty rules require them to ensure the best possible outcomes for older borrowers, sometimes by working with specialist partners.
Borrowers require flexible solutions enabling them to manage borrowing costs
| GETTYThese later-life lending solutions could help prevent the financial distress currently affecting thousands of bereaved families across Britain.
Will Hale, chief executive of Key Advice, warned that "later life customers should not be worrying about the risk of repossession but that is a potential risk as the number of over-65s with mortgages continues to rise".
He stressed these borrowers require flexible solutions enabling them to manage borrowing costs whilst maintaining living standards, particularly when facing unexpected health issues or income reductions.
These later-life lending solutions could help prevent the financial distress
| GETTY"Mainstream mortgage advisers need to recognise the innovation that has taken place in the lifetime mortgage sector and ensure that all options are considered when dealing with over 50s customers," Mr Hale said.
The sector received backing in September when trade body UK Finance advocated for later-life lending to become "more mainstream".
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