Research from specialist insurer Partnership has found, while the majority make monthly repayments to pay off a mortgage (58%) or make lump sum payments in addition to monthly contributions (22%), some have other ideas.
One in 10 (389,483) said they intended to use their tax-free pension lump sum to repay the outstanding balance on their mortgage and 5% (199,069) plan to use their pension to repay the outstanding balance on their mortgage.
Mark Stopard, head of product development at Partnership, said: “It is worrying to see that over half a million people in England plan to use all or part of their pension to repay their mortgage.
“This suggests that the number of people who actually need to do this is likely to be far higher as unexpected events such as redundancy, illness or family financial emergencies cause issues.”
The findings showed 7% (268,311) claimed to have savings or investments set aside to meet this cost and 6% (225,035) will use an inheritance to repay their mortgage. A small proportion (3%) said they would take in would take in a lodger to help them meet the cost – neither of which are guaranteed sources of finance.
Stopard added: “This research clearly highlights that people need to focus on repaying their mortgage as early as possible and avoid traps such as remortgaging for the full period each time they take out a new deal.”
