New research by Scottish Friendly reveals ongoing financial challenges for many mortgage-free homeowners.
- 18% of mortgage-free homeowners describe their financial status as ‘uncomfortable’, with 7% finding it ‘very uncomfortable’.
- While most mortgage-free individuals feel financially at ease, 40% report only being ‘somewhat comfortable’.
- The survey highlights those juggling multiple financial priorities, particularly in various age groups, as feeling most uneasy.
- Kevin Brown emphasises the significance of financial planning across short, medium, and long-term horizons.
In a recent study conducted by Scottish Friendly in partnership with the Centre for Economics and Business Research, it was found that a notable 18% of individuals who own their homes outright perceive their financial situation to be ‘uncomfortable’. Of these, a smaller segment, around 7%, describe their financial discomfort as ‘very uncomfortable’. This research is part of the 2024 Family Finance Tracker, which scrutinises the savings and investment habits among UK adults.
Interestingly, while a majority of mortgage-free homeowners, about 62%, indicate a sense of financial comfort, a substantial portion of 40% report only feeling ‘somewhat comfortable’. This suggests a nuanced financial landscape where complete home ownership doesn’t necessarily translate to economic peace of mind for a significant number of people.
The analysis reveals that many of those who feel financially uncomfortable are navigating through life stages that require balancing various financial commitments. Specifically, the age distribution among this group shows that 7% are between 25 and 34 years, another 7% fall in the 35 to 44 age bracket, while 13% are aged 45 to 54. Significantly, 43% of those who feel uncomfortable are 65 or older, highlighting particular financial concerns prevalent among senior homeowners.
A comparative look at individuals who are still servicing a mortgage or paying rent shows varied perceptions of financial stability. Among homeowners and joint owners with a mortgage, 35% feel comfortable with their finances, while 38% express discomfort. Owners with shared equity are split evenly, with 39% feeling both comfortable and uncomfortable. In contrast, renters are notably less at ease, with only 25% of private renters and 23% of social renters expressing financial comfort, and a high percentage, 50% and 54% respectively, indicating discomfort.
Debt appears to be a common issue across various housing tenures. Among mortgage payers, 33% manage credit card or personal loan debt, paralleling the 30% of private renters who also face such financial challenges. This debt burden is a critical factor influencing the overall sense of financial insecurity.
Kevin Brown from Scottish Friendly remarks that the findings are unexpected given the popular belief that being free of mortgage obligations should equate to financial stability. He points out the necessity for individuals to develop short-term, medium-term, and long-term financial plans to build resilience and mitigate future financial uncertainties. He encourages individuals to take proactive steps, no matter how small, in strengthening their financial standing.
Despite being mortgage-free, many homeowners still experience financial challenges, underscoring the importance of comprehensive financial planning.
