In days gone by, when you retired you sat back and relaxed, enjoying the fruits of years of labour. But poor stockmarket performance, insufficient pension savings and longer life expectancy mean many people are now struggling to make ends meet after they reach their 65th birthday.
To add to the woes, an increasing number of people are hitting their pension years, and the substantial drop in income that entails, with mortgages still to pay.
A combination of falling house prices, people taking out mortgages later in life and interest-only mortgages mean more people haven't paid off their loan before they hit retirement age.
Finding the money to meet your mortgage repayments once you are living on a fixed income can be difficult. It's not surprising then that of the number of people claiming Support for Mortgage Interest (SMI), a benefit aimed at helping people meet their mortgage commitments, 52% are retired, according to figures from the Mortgage Market Review by the Department for Work and Pensions.
So what can you do if you are approaching retirement, or are already retired, and still have a mortgage to pay?
If you have enough left on your mortgage that you are going to have to continue paying it off for years to come it is worth speaking to your mortgage provider and a mortgage broker to see if you could move onto a better deal.
However, it may not be easy to get a competitive deal. "Although we are an ageing population, lenders have been reining back from allowing borrowers to continue with their mortgages into retirement," says Mark Harris, chief executive of mortgage broker SPF Private Clients.
"If you have got a mortgage in retirement, it is unlikely that you will find a great range of options available to you in terms of new deals and competitive rates. It may be that you must stick with your existing lender, which usually means staying on the standard variable rate (SVR).
SVRs vary considerably from lender to lender so it depends what yours charges as to whether your deal will be competitive or not."
Those customers with interest-only mortgages may find it particularly difficult. As many lenders have tightened their lending criteria, customers coming to retirement with these mortgages may well struggle to find a lender willing to extend their mortgage on this basis.
These customers will then find themselves having to switch to a repayment mortgage, meaning their monthly repayments go up at a time when they are trying to minimise their outgoings.
Minimum terms for remortgages may also affect certain customers nearing retirement. For example, if you are finishing work in three years and you want to be mortgage-free once you retire you may struggle to find a lender that will lend over such a short period.
Most will have a minimum of five years, meaning you'll be making repayments for two years into retirement.
This is why it can really pay to speak to a mortgage broker. They know the market well and can scour it for the lenders that are most amenable to older borrowers.
"Existing lenders will all have their own criteria but remortgage options may well be curtailed as not all lenders will want this business and the benefits of independent advice may well prove crucial to ensure deals are considered with niche as well as mainstream lenders," says Jon Tweed, national sales manager at Hodge Lifetime.
While many lenders will not allow borrowers to continue with a mortgage into retirement, the handful that do have strict criteria.
The primary concern for lenders when it comes to offering mortgages to older borrowers is whether they will have the means to repay it. However, the fact that people are working for longer means some lenders are becoming more lenient.
"There are lenders that will go past retirement age," says Fahim Antoniades, group director at Mortgage Centre IFA. "Those that do like to ensure that where they are asked to exceed retirement age, the borrower concerned has the means to carry on repayments past age 65.
"Typically, those who can carry on would be selfemployed (as such, they have the option to carry on working); would not have a physical job where strength and youth is key; or can demonstrate sufficient postretirement income to carry a mortgage. If that is the case the lender would typically offer a mortgage term that would run to age 75."
Each lender has its own criteria when it comes to lending to the over-65s. Leeds Building Society, for example, has a maximum age of 80 (at the end of the term). The maximum age at the date of application is 70, with a maximum loan-to-value (LTV) of 70%. Northern Rock will lend up to 75 years old, as will Santander and Coventry Building Society.
What to do before you retire to reduce your mortgage burden
If you can afford to make overpayments on your mortgage it may be worth finding out if your lender allows you to overpay. If it does, you could clear your mortgage faster and be mortgage-free by the time you give up work.
Speak to your lender
Your lender does not want you to be unable to meet the monthly repayments in retirement, so see what help it can offer.
Enlist a broker's help
A good whole-of-market broker can help to find the most suitable mortgage for you.
If you are struggling to remortgage, another option is to downsize - sell up, pay the mortgage off and use the remaining cash to buy a new, smaller home. Of course, there are emotional consequences to this.
"We've explored this concept of downsizing with people who are just about to retire," says Stephen Lowe, director of external affairs at Just Retirement. "They say, 'I've spent all my life creating this house I'm now about to enjoy. I'm not selling and moving to some pokey little pad.' The thought of downsizing is abhorrent to some people."
But equally, for others, a smaller, more manageable home can be the ideal solution.
Another option to consider is equity release. This allows you to withdraw some of the equity from your home in order to pay off your mortgage. The money you have borrowed from the equity release firm is then paid off when your home is sold - usually following your death or move into a care home.
"It's for people who don't have sufficient income to continue servicing debts," says Lowe. "The peace of mind the customer gets when they take an equity release lifetime mortgage is that they know they can live in that house until the day they die and that whatever happens you or your children will never have to pay more than what the house is worth (known as a no-negative equity guarantee)."
Borrowers just need to be aware that equity release firms aren't handing out free money. "It is a great tool for certain circumstances but it is an expensive form of mortgage lending, hence one must be careful else it could be the wrong the tool for the job," says Antoniades.
The problem of pensioners with mortgages isn't going to disappear, in fact, with people having to wait until later in life before they can afford the deposit on a home mortgages are, obviously, going to run until later on in people's lives. However, industry insiders say this is something lenders are aware of and, as a result, we may see big changes in the mortgage market in the future.
Antoniades says the system will adjust and reinvent itself. "For example, there could be intergenerational mortgage products where parents hand down mortgages to their children," he says.
However, for now, the best way to deal with mortgage debt in retirement is to see what deals are available and explore alternative options.
What to do to ease your mortgage burden if you are retired
Seek the state's help
The Support for Mortgage Interest scheme was created to help people who are struggling with their mortgages. If you are receieving pension credit you could qualify. To find out if you are eligible visit direct.gov.uk.
Consider equity release
While it is not the perfect solution for everyone, equity release can be a useful way of clearing an outstanding mortgage.
It may not be what you had planned to do in retirement but downsizing can help you to clear your debts.