Millions of UK mortgage-holders financially vulnerable says Royal London
New research reveals 5.2m UK mortgage-holders are ill-prepared for unexpected illness
30th January 2015
- 5.2m mortgage holders who earn an income have no plan in place to cover their mortgage repayments if they become too ill to earn; and 1.8m admit they have not given it any thought.
- 2.6m mortgage holders who earn an income do not know how long they could survive financially if they were too ill to earn; and 1.1m wouldn’t know where to turn for financial advice if they faced this situation.
New research from Royal London highlights that 52% of UK mortgage-holders who earn an income don’t have a plan in place to cover repayments if they fall too ill to earn for 3 months or more – this equates to 5.2m people. This is despite the fact that a quarter (25%) of them (2.5m people) know someone who has struggled to afford their mortgage due to illness.
These findings come as the mutual joins Seven Families - a charity-led initiative which aims to raise awareness of the financial impact of long term illness and disability. YouGov surveyed 2,208 UK adults for Royal London, and found that although many (34%) of those without a plan in place to cover repayments have thought about it, a worrying 18% (or 1.8m people) admitted they have not given it any thought.
Royal London also found concerning evidence that many mortgage-holders who earn an income, haven’t considered how long they could cope financially if they became too ill to earn: half (50%) estimated it would be six months or less, and over a quarter (26%) don’t know how long they could cope (this equates to 2.6m people).
Other key findings (among UK mortgage-holders who earn an income):
When asked how their household would cope if they became too ill to earn: the majority (59%) would reduce their household expenses; over half (51%) would use savings; whilst 46% would rely on the earnings of someone else in the household; and 34% would apply for state benefits.
When asked who they would turn to for financial advice if they became too ill to earn: 36% would consult friends and family, but 21% said they would not seek any advice. The majority (56%) would turn to a non-profit/charity or government body, and a minority (15%) would consult a financial adviser, but a worrying 11% (1.1m) admitted they wouldn’t know where to turn.
Debbie Kennedy, Head of Protection Proposition for Royal London’s Intermediary Division, said:
“Seven Families shines a light on an important issue: how people would cope financially if they faced serious illness or disability, and became too ill to earn money to cover financial commitments like their mortgage. Our research highlights how many UK mortgage-holders are in a vulnerable position – unsure how they’d cope financially and who they would turn to for financial advice. We urge mortgage-holders who earn their income to consider how they would cope if they became too ill to earn.”
Peter Le Beau, Income Protection Task Force Chairman, and spokesperson for Seven Families, said:
“It is excellent news that the number of supporting companies for Seven Families continues to grow. Having Royal London on board is incredibly important and will allow us to further improve the services we will be providing to the families.”
Notes to Editors:
- Royal London Group provides protection, including Critical Illness and Income Protection, through Scottish Provident and Bright Grey. Between them, they protect the lives of over one million people in the UK.
- Methodology: research was conducted by YouGov from 22nd to 23rd January 2015. The survey was conducted online among YouGov’s UK panel of 350,000+ individuals. 2,208 UK adults took part in the research. The figures have been weighted and are representative of all UK adults (aged 18+). 750 respondents were mortgage-holders and among this group 443 said they earn their income. In UK population terms, this equates to 10m UK adults. This press release refers to them as ‘mortgage-holders who earn an income’.
- The survey asked people who own their house with a mortgage: Does your household currently have a plan in place to cover your mortgage repayments if you/any other people in your household ever became too ill to earn money for a period of 3 months or more (e.g. a financial product, savings account etc.)? They could select one of four options: Yes, I/we do have a plan in place; No, I/we do not have a plan in place, but have thought about it; No, I/we do not have a plan in place and have never thought about it; Don't know. The survey also asked how they’d cope, and who they’d turn to for advice. For these two questions, respondents could pick more than one option.
- All population calculations are based on ONS population data: 50.5m adults in UK.
i. 5.2m figure: YouGov found 19.88% of UK adults have a mortgage and earn an income = 10,040,534; 52% of this group said they have no plan in place to cover their mortgage. 52% of 10,040,534 = 5,221,077.
ii. 2.6m figure: YouGov found 19.88% of UK adults have a mortgage and earn an income = 10,040,534; 26% of this group did not know how long their household could cope financially if they were too ill to earn. 26% of 10,040,534 = 2,610,539.
iii. 1.8m figure: YouGov found 19.88% of UK adults have a mortgage and earn an income = 10,040,534; 18% of this group said they have no plan in place, and have never thought about, how they would cover mortgage repayments if they/someone else in their household ever became too ill to earn money for 3 months or more. 18% of 10,040,534 = 1,807,296.
iv. 1.1m figure is based on ONS population figures: YouGov found 19.88% of UK adults have a mortgage and earn an income = 10,040,534; 11% of this group said they don’t know who they would turn to for financial advice if they ever became too ill to earn money for a period of 3 months or more. 11% of 10,040,534 = 1,104,459.
- According to the Council of Mortgage Lenders, there are 11.1m mortgages in the UK, with loans worth over £1.3 trillion: www.cml.org.uk/cml/media/press/4110
About Seven Families
Seven Families is a charity-led campaign to raise public awareness of the financial impact of long term illness or disability. Administered by Disability Rights UK and the Income Protection Task Force, the year-long campaign will provide financial support for a year to the breadwinners of seven families who are currently unable to work because of ill health or accident. Visit www.7families.co.uk for more information and updates on the families as their stories unfold.
About Royal London
Royal London is the UK’s largest mutual life, pensions and investment company, with Group funds under management of £78.4bn. Group businesses serve around 5.3m customers and employ 2,823 people (figures accurate as of 30 September 2014). The Group is currently moving all of its UK life, pension and investment businesses under a new version of the Royal London brand. Its protection brands, Scottish Provident and Bright Grey will rebrand in 2015.
For more information please contact:
- Royal London: Nancy Baynes, PR Manager: 0207 506 6585/07919 170524/ firstname.lastname@example.org
- Seven Families: Kevin Carr - Carr Consulting & Communications: 07887 838811 / email@example.com