According to Saga Personal Finance, two-thirds of people with an interest-only mortgage believe their endowment won’t pay their debts off, while 30 per cent of over 50s admit that they have no way of making up the shortfall.
In order for people to be able to make the difference, some are now being forced to consider selling their homes in order to make up the average shortfall, which is now over £42,000.
Chief operating officer for Saga Jeff Bromage described being stuck with this kind of debt in retirement as being “far from ideal”, going on to add: “A growing number of people are turning to equity release as in order to avoid selling their home, upping sticks is probably the least-favoured option for many facing a shortfall, as their home is so much more than bricks and mortar and will hold so many happy memories.”
This comes after Barings revealed that nearly six million people intend to either sell or rent out their property in order to fund their retirement, a rise of 13 per cent compared with 2013. The company’s Rod Aldridge observed that given how volatile property prices are, it is perhaps not wise to rely solely on this as a source of retirement income.