Homeowners 'should pay off mortgage before reaching 55'

Posted: 09 Mar 2010 10:58:20 GMT

Homeowners would be wise to pay off their mortgage before they reach the age of 55 so that they do not have to deal with a large level of debt in retirement, one expert has suggested.

Timothy Lambert, head of consulting at independent property consultancy Ducalian, says that income typically drops as people retire, so they will not want a home loan still hanging over them.

"I can see that paying off a mortgage over a longer period frees up capital to invest in other areas, but it's important to try and have a mortgage paid off before 55 if at all possible," he states.

But Mr Lambert's advice stands in stark contrast to that recently reported in the Daily Telegraph, which suggested that continuing to pay off a mortgage in retirement can be a good option for some homeowners.

The publication's research found that getting rid of a home loan may not be the most prudent option for retirees, as they could use the mortgage as a method of estate planning, which would alleviate the need for their beneficiaries to pay inheritance tax.

According to a recent study by Aviva, people aged 75 and above have the most valuable properties in the UK, standing at an average of £261,425.

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