Too many over-65s are dying with a traditional mortgage they have not paid off, creating issues for loved ones, according to Key Advice.
The equity release adviser said around 26,000 over-65s with outstanding mortgages died last year, according to its analysis of government figures.
Key said this creates potential problems for any partners and the beneficiaries of their estates who will have to clear the outstanding mortgage or continue payments.
Around 28% of inherited estates include properties which still have an outstanding mortgage attached, Key said. More than 500,000 retired people are estimated to have outstanding mortgages.
Key said that bereaved partners could be at risk of repossession if they cannot maintain payments on the outstanding mortgage. Most mortgage lenders offer grace periods of between three and six months following the death of the mortgage holder but interest continues to accumulate.
Options for bereaved partners include remortgaging or selling the home and downsizing.
Key Advice chief executive Will Hale (pictured) said: “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 and they need solutions that enable them to make payments, to continue to manage their cost of borrowing, whilst allowing for flexibility to maintain their standard of living even when circumstances such as ill health or reduction in employed income may happen unexpectedly.
“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.”
In September, trade body UK Finance called for later life lending to become “more mainstream”, arguing that many of its members do not want the sector to be “further carved out from the rest of the market”.
