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One in five people will retire with debt


Research from Key Retirement, the retirement specialists, shows that nearly one in five people over the age of 45 will retire in debt.

The research shows that 9% of people over the age of 45 are unsure if they will be able to pay off all their debts before retirement, and 10% do not expect to clear them at all. Currently, 53% of over-45s owe money on credit cards, mortgages, personal loans or other finance arrangements.

Even though debt was seen to be a problem among the over 45s, the report also calls for lenders to be more flexible on lending to older borrowers since the introduction of the Mortgage Market Review. Lenders now seem to be unwilling to approve loans that will not finish until pass standard retirement age.
Some companies require loans to be paid off by state pension age, while others insist mortgages are cleared by 70. This is adding further to the shrinking of the mortgage market, consequently effecting house prices.

Dean Mirfin, group director at Key Retirement, said:

“Access to credit is a major issue for many people as they get older and more particularly for the over-55s and over-65s, as demand remains high while lenders remain wary and the risk of rejection is high.

“Lenders have to be responsible and ensure that customers can afford to repay but at the same time there are millions of over-55s who are creditworthy and should be able to borrow responsibly.

“The interest-only mortgage issue, where many homeowners have looming deadlines to clear capital, highlights the need for new products and new thinking which potentially can include equity release.”

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