Around 26,000 over-65s with outstanding conventional mortgages died last year, according to estimates from equity release adviser Key.

The group suggested that this could create potential problems for any partners and the beneficiaries of their estates who will have to clear the outstanding mortgage or continue payments.

Key cited industry data from Property Saviour which showed that around 28% of inherited estates include properties which still have an outstanding mortgage attached, while more than 500,000 retired people are estimated to have outstanding mortgages.

Bereaved partners could be at risk of repossession if they cannot maintain monthly payments on the outstanding mortgage. Most mortgage lenders offer grace periods of between three and six months following the death of the mortgage holder, but interest continues to accumulate.

Key said that an increased use of later life lending options, including modern lifetime mortgages, will help address financial wellbeing issues for over-65s with outstanding conventional mortgages.

“Advisers need to continue to engage with older customers, and their families, and consider all options in order to deliver good outcomes in line with Consumer Duty obligations,” said Key CEO, Will Hale.

“Later life customers should not be worrying about the risk of repossession but that is a potential risk as the number of over-65s with mortgages continues to rise and they need solutions that enable them to make payments, to continue to manage their cost of borrowing, whilst allowing for flexibility to maintain their standard of living even when circumstances such as ill health or reduction in employed income may happen unexpectedly.

“Mainstream mortgage advisers need to recognise the innovation that has taken place in the lifetime mortgage sector and ensure that all options are considered when dealing with over-50s customers.”

---