Mortgage nightmares to haunt homeowners in retirement

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Mortgage nightmares to haunt homeowners in retirement

A financial study carried out recently has disappointingly revealed that a third of the middle-aged property owners will be forced to continue making mortgage payments well into their retirement years. This is particularly worrying as a large majority of these home owners will be relying on their savings and pension payments to get by in their retirement and post retirement years; retirement typically sees a significant reduction in the amount of income pensioners tend to receive.

What is more, those who have less than a decade to pay off on their mortgage currently still have a staggering £55,046 left to pay in mortgage debts; surprisingly even those over fifty five years old fall in this bracket. This mortgage debt equates to an average monthly mortgage repayment of approximately £725 every calendar month.

An official from the mortgage consultancy website, Karen Barrett, confirmed that the study greatly suggests how those in their 50s are depressingly stumbling upon the truth of still having to deal with mortgage repayments before or even well into their retirement age.

Rapidly increasing numbers of people could find themselves having to put off their retirement following nerve wrecking amounts of unsecured debts that they have stock-piled over the years. This is based on findings made public by other researchers.

Facts put forward by the debt solutions group, Payplan revealed that a person between the 50 to 60 age brackets who has taken up a debt management plan typically owes an outstanding average amount of £41,400 through credit cards, loans and other unsecured borrowings.

The above debt figure is just over twenty five percent higher when compared to the unsecured debt built up by members of other age groups; the average debt of those in other age bands stands at about £32,700.

It is therefore not astounding to find those close to their retirement age taking a much longer length of time to clear their outstanding debts when we take into account the larger sums that they typically owe (as demonstrated above) and the fact that they have a lower earning potential when entering their retirement years.

In comparison, those homeowners between the 50 to 60 years age brackets typically have a debt management plan in place which lasts an average period of eleven years while members of the remaining age groups have a debt management plan which lasts an average of nine years. A debt management plan is in simple terms an informal agreement with creditors; the terms by which a debt management plan is usually agreed allows the borrower’s debts to be repaid using a more affordable monthly payment amount and over a length of time which makes the repayment plan more affordable.

Debt management plans are becoming increasingly common place as more and more individuals have mounting unsecured debts which they are struggling to repay. These debt management plans are negotiated by a third party on behalf of the client. An experienced counsellor will negotiate with your creditors to set up an affordable debt management plan on your behalf. Any plan will take into account your monthly income, your essential livings costs, such as your mortgage payments, food, utility bills and fuel, and will then work about what you can reasonably afford to pay. In many cases, if the creditor knows that you are in financial difficulty they will often freeze any interest charges.

A portion of the debt can often be written off, whilst a experienced counsellor will negotiate with you creditors to set up a debt management plan on your behalf. The remaining amount is structured into a payment plan which is considered to be affordable on the part of the client.