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Anyone with a mortgage can have difficulty repaying the loan. But older people with interest-only mortgages are particularly likely to be affected. If you’re facing trouble with your finances or struggling to repay your mortgage, you can get help to work out your options.
There can be many reasons why people struggle to pay their mortgage. For some people it’s down to a lack of planning, but for others it could be a result of unexpected life events, such as redundancy, health or family problems.
It is becoming increasingly common for people to still have mortgage debt when they retire, and not have enough income to cover repayments.
With interest-only mortgages, borrowers just repay the interest on the mortgage. Monthly repayments are lower than on capital repayment mortgages. But, at the end of the mortgage term, you have to pay off the full loan. You’re expected to have a plan in place to clear the debt using savings, investments or other assets.
Many older people bought these mortgages along with endowment policies, which haven’t performed as well as expected since the 2008 financial crash. They are now finding it difficult to pay off the mortgage at the end of the deal because they don’t have enough money set aside.
If you’re having problems, you should talk to your mortgage lender first. You may be able to change your mortgage terms or change the type of mortgage that you have. Although you may be restricted by the mortgages available to you, some lenders are becoming more flexible and extending the upper age limit for borrowing. Repossession should be the last option that your lender considers.
If you have an interest-only mortgage, you’re responsible for putting in place a repayment plan. You should review it regularly and check with your lender to make sure your plan is sound. MoneyHelper has a mortgage calculator which can help you work out what you’ll have to pay.
Check your cover if you took out mortgage protection insurance. You might be able to claim if your income has fallen because of illness, for example.
If you want to know about regulated financial products, you’ll need to speak to an independent financial adviser. You can find one through the Society of Later Life Advisers or Unbiased.
Whatever your situation, don’t ignore the problem – it won’t go away. It’s best to take action to deal with it as soon as possible. Citizens Advice has more information and can advise you if you’re having mortgage problems.
You could consider:
Don’t just hand back the keys to your lender – you’ll still be legally responsible for the debt and they may sell the property at a lower price.
Make sure you’re claiming all the benefits you’re entitled to. You can use our benefits calculator to work out what you could get or call our Helpline and arrange to speak to an adviser.
You may be able to claim help with housing costs. If you’re on certain benefits, you may be able to get a Support for Mortgage Interest (SMI) loan paid by the Department for Work and Pensions, which can help to pay the interest on your mortgage. Visit MoneyHelper for more information.
If you’re struggling to regain control of your finances, you can get help with debt.
For more housing advice, visit Shelter find your local Citizens Advice.
Visit MoneyHelper for more information about mortgages.
Search the Society of Later Life Advisers or Unbiased for an independent financial adviser.
Call our Helpline or use our benefits calculator to check if you’re entitled to any benefits.