Pensioners are burdened with debts of £57 billion from mortgages and credit cards, new figures show. One fifth of retired people are still paying off a mortgage and a third owe an average of £5,900 on credit cards and loans, says Scottish Widows, the insurer. The 1.1 million pensioners who are still making repayments owe an average of £38,000 on their homes, compared with £35,000 last year. One in eight owes more than £50,000. In addition to these debts, almost 700,000 pensioners have children who are not financially independent. But only a third of these are schoolchildren.

There is an increasing tendency for homeowners to remortgage their homes to help to fund their retirement or to help their children on to the housing ladder. A recent report from the Prudential insurance company said that one in five Britons expected to have to sell the family home to fund retirement, while about 7 per cent planned to borrow against the home to provide extra money.

Mike Warburton, of the accountancy firm Grant Thornton, said: “Some older people are simply taking out a second mortgage rather than getting involved in an official equity release plan. In the past, people in their fifties and sixties wouldn’t have dreamt of having a mortgage.”

Equity release schemes allow homeowners to borrow money without making any repayments. The outstanding debt is repaid when they die or when they sell the property.

Ian Naismith, of Scottish Widows, said: “The easy availability of mortgages in recent years has encouraged many people to take out mortgages extending beyond their likely retirement dates. This makes home ownership more affordable, but could be storing up problems for the future, especially if interest rates continue to rise.”

Many banks and building societies have relaxed the age criteria for mortgage applicants in the past five years. Halifax, Britain’s biggest lender, does not have a maximum age for borrowers, although applicants aged 58 who ask for a mortgage that extends beyond their 65th birthday will be asked to provide evidence that they will be able to afford the loan once they have retired.

The Abbey bank says that mortgage applicants cannot be over 85 years if they are borrowing more than 75 per cent of the value of their home, although if they are borrowing less there is no upper age limit.

James Cotton, of the mortgage broker London & Country, said: “Lenders are definitely more flexible now. They are not necessarily being lax, because if someone has the ability to repay a loan it is difficult to refuse them on the basis of age.”

But charities say that older people could start to struggle. Paul Bates, of Help the Aged, said: “With one in five retired homeowners still paying a mortgage and one in five pensioners living in poverty, the future looks pretty bleak. When people don’t have work to fall back on, financial worries can be incredibly stressful and have a ripple effect on health and well being.

“The Government needs to take stock of how financial advice is given to those approaching retirement so that people do not walk into older age with unmanageable debt.”

Hard times

1.1m Over 65s still repaying mortgage

£38,000 Average amount they owe

7% Plan to borrow against home to free some money

Source: Scottish Widows

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