Mar 19, 2018 12:00:00 AM

Retiring with mortgage debt

Topics: Retirement, Mortgages, NZ Finance, Home Loan, reverse mortgage, Mortgage Debt 0

An alarming number of New Zealanders will retire with mortgage debt, says credit rating business Credit Simple, indicating that a financially secure retirement is out of reach for many Kiwis. But it needn’t be. Planning ahead today goes a long way towards securing your retirement income stream tomorrow.


Buckling under debt pressure

If you’re heading into retirement with mortgage debt, you’re not alone. According to data from Credit Simple (released in May 2017), 28 per cent of mortgages are held by those aged 55 years and older, while New Zealanders aged 65 and over hold eight per cent of mortgages with an average debt of $232,000.

Unsurprisingly, those living in Auckland have the most mortgage debt: An average of $393,229 left to pay down. Kiwis over 55 also make up a startling 27.8 per cent of bankruptcies in New Zealand according to Credit Simple, largely as a result of retiring with mortgages, personal loans and credit card debt.

Spokesperson for Credit Simple, Hazel Phillips said that anecdotal evidence pointed to many home owners putting big expenses, like a holiday or extensive renovations, onto their mortgage instead of saving up for it. Phillips said the ideal position for heading into retirement is owning a mortgage-free home with some savings in the bank.

Kiwis can check if their credit health is in shape by getting their credit score for free at

Get mortgage-free

Your house is likely your largest asset so it’s worth planning ahead today to ensure a financially secure retirement for your future. Here are two ways you can do this.

Refinance your mortgage early:

Refinancing to a better interest rate or better terms could help reduce your mortgage repayments. By maintaining your mortgage repayments at current levels despite a reduced interest rate, you’ll shave years off your mortgage repayments. Or you could consider shortening your mortgage term and paying more each fortnight or month to clear your mortgage debt faster. 

Scale down:

Downsizing to a smaller, lower-priced home in retirement makes good financial sense. The equity in your existing home may even be enough for you to purchase a smaller home outright, leaving you mortgage-free. Scaling back to a more economical home also helps reduce your mortgage repayments and could help you cut back on your monthly expenses like power bills and rates.

A secure financial future

There’s no doubt that retiring without a mortgage reduces stress, provides peace of mind, and offers a significant equity cushion that can be released in times of emergency.

If you’d like financial advice around retiring without a mortgage or you’d like to find out about freeing up your finances with a reverse mortgage, talk to a Mortgage Express adviser today.



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