Homeowners 'should be mortgage-free by 55'

Tuesday, March 9 2010

People should consider paying off their mortgage before they reach 55 to avoid being in debt in retirement.

According to head of consulting at Ducalian Timothy Lambert, people should try to plan early for this time.

"With income typically dropping significantly into retirement, the last thing people want is a large level of debt still [waiting to be] paid," he advised.

There is also the added bonus that paying off a mortgage quickly means less money is spent on interest.

Mr Lambert continued to explain that many homeowners do not treat their mortgage as a priority, but this is not the most financially sensible approach.

His comments follow reports from the Daily Telegraph that mortgage rates are currently quite low, so it might be wise to use extra money to overpay on this debt.

Although for some, this may not be the best option because certain homeowners could use it as a way of estate planning at mitigating inheritance tax after their death, the publication claimed.