It brings people relief but also a little extra cash to splash each month.
Spending money is a hobby that everyone loves to do and its something that Britain’s over 50’s are very experienced in.
According to Saga Investment Services, there is a £322 increase of income that Britain’s over 50’s are receiving after they have paid off their mortgages.
This is leaving their pockets as soon as it enters them and who can blame them!
But are people doing the right thing by spending this extra money?
Nici Audhlam-Gardiner, Managing Director at Saga Investment Services, said:
“Repaying a mortgage is one of life’s biggest financial achievements, and it’s understandable that people want to enjoy the income boost that they’re finally getting after decades of debt repayments.
“But this often comes when there’s limited time to build up as big a nest-egg as possible for retirement.
“In our survey, a third of people said they were able to retire earlier than planned because they’d made the effort to put their extra income into their pension, while 44% said they have ended up with a higher retirement income than they originally expected.
“Making the most of your finances in the run up to retirement is vital to ensure you have a comfortable life once work is over.
“Professional financial advice for people at this age can help formulate a plan to get the income they need.
“That’s why it’s good to see the government backing greater access to advice by giving people early access to their pension to pay for the help they need.”
The survey also found a gap between repaying a mortgage and retirement.
The average retirement age of those surveyed was 62, and this cohort repaid their mortgage at an average age of 55, resulting in a seven year gap between mortgage payment and retirement.
From a Financial Planning perspective, making the most of extra cash available during the gap between mortgage repayment and retirement is really important.
This is the time to boost your savings and investments for later life, putting away as much as possible for that time when you need it.
When we construct Financial Plans for our clients, we help them understand when mortgage repayment is likely to occur and how financial resources can be best allocated in the gap until retirement.
What will you do with the spare cash when your mortgage is repaid?