Want to retire but haven't paid off your mortgage?

by Jasmine Birtles – Money expert and financial journalist
Last updated 18^th March 2025 by the SunLife Content Team
9 min read

If you’re coming up to retirement and you still have a chunk of your mortgage to pay off, you might be thinking about how to ditch the debt early so you can move into retirement mortgage-free.

Of course, you don’t have to do it. Mortgage payments are generally a constant, or even reducing, payment when you’re approaching retirement. So it’s not necessarily the worst debt to have when retired. If you wanted to, you could potentially switch to a 'retirement interest-only' mortgage, which could be quite a cheap option. They are more widely available than before.

But if you want to retire without any mortgage to pay, there are a few things you can do to pay it off in double-quick time and enter retirement mortgage-free.

Check your income

Firstly, although mortgage payments are a big outgoing each month, it’s worth checking how much you'll be getting from your pension, savings and State Pension.

It’s possible that you'll be getting such a good income that continuing to pay off your mortgage, at least for a few years, won’t be much of a problem.

Check with your HR department at work to see what your projected pension income will be once you retire. Also, it’s worth considering paying an independent financial advisor at this stage to look at all your pensions, savings and investments, together with what you expect to be your outgoings. They can give you a clear idea of how much money you'll have to play with once you retire. If you don’t already have a financial advisor, you could find one at Vouchedfor.co.uk(website opens in a new tab).

Switch to a cheaper mortgage

If you're on a fixed deal that's coming to an end soon, it’s worth speaking to a mortgage broker (or more than one) to see what their advice is about the market. If they think interest rates could go up, it will be worth grabbing a good fixed rate right now. But they might consider that rates will go down in the next six months – in which case, it’s worth sitting tight and waiting.

Reduce the mortgage term

If you want to pay off your mortgage in double-quick time (and good for you if you do!), one way to help yourself do this is to ask your mortgage company to reduce the term of your mortgage. If you're going to switch your mortgage, it’s even easier as you can set out the term from the start.

This means that instead of having, say, another ten years to pay off your mortgage, you deliberately reduce that time to, maybe, five years. So you'll have to pay more each month, but less of the money you pay each month will go into paying off interest, and more of it will pay the actual debt itself.

So ask your mortgage company, first, if they would let you reduce the term of your mortgage. If they agree, ask how much you'd have to pay each month if you reduced your term by, say, five years. If you could afford that quite easily each month, consider reducing the term even further. Ask how much it would cost to reduce it by eight years, and so on. Make the term as short as possible, because the shorter the time it takes to pay off the mortgage, the less you'll pay overall. Just make sure you'll be able to cover the mortgage payments each month.

Pay off lumps here and there

Another way to pay off the mortgage quickly is to add in extra lumps of money when you get them.

Not all mortgages allow you to overpay like this, but most will let you pay off up to 10% of the outstanding debt each year. If you have a variable rate mortgage or an offset mortgage (where you offset the amount you’ve borrowed with the amount you have in your savings and current accounts with that lender) you should be able to pay off as much as you like each year.

If you do it this way, rather than reducing the term of your mortgage, you have to be extra disciplined. You'll need to make sure that any spare cash you have goes straight into the mortgage, rather than being spent on fun things!

Paying off lumps of the mortgage can be a good strategy for people who get bonuses here and there, or for self-employed people whose income tends to be erratic.

Use your savings

Do you have a nice lump of money in savings accounts? It’s helpful to have that cash to pay your way in retirement, but it’s likely that you're making less interest on it than you're currently paying on your mortgage!

Now, I’m not saying you should empty out your savings to pay off the mortgage. It’s important to have money to fund your retirement and pay for a rainy day. But if you have a lot of money in savings and a relatively small amount still to pay on the mortgage, it could be worth using your savings to pay off the mortgage. Then you could carry on working for a bit to top up your savings.

It’s worth talking to an independent financial advisor about this. They'll look at your incomings and outgoings and tell you if it would be advisable to use your savings.

Keep working

You might not like the sound of this, but if you still have a mortgage to pay, you’re going to have to keep earning for a while – unless you’re expecting a really good pension.

The obvious way to do that is to keep working, if you’re able to. If it’s not something you want to keep doing, or it’s too strenuous, you'll need to find another job, or maybe take up one or more of the side-earners below.

Do some side-earners

• Can you drive? Great. You could get flexible work as a taxi driver through firms such as Uber. Or you could work as a delivery driver for one of the supermarkets, for Amazon, or for one of the many courier services like Yodel or Evri.
• Can you bake? Yum! Get into making cakes, biscuits, sweets and more to sell at car boot sales, garages and local markets. Or create decorated celebration cakes for weddings and birthdays, which you can sell through Facebook groups or local websites like Nextdoor.com(website opens in a new tab).
• Do you love animals? Dog-walking is a wonderful way to make money, keep fit and get some fresh air. You can make decent money, particularly if you can look after them in your home as well. As with the delivery driver jobs above though, you'll need to get some insurance to cover you in case of any accidents with the dogs.
• Are you friendly? Go and work in your local cafes, restaurants, pubs, clubs and bars to make money and have a good time with the punters.
• Are you in a city? There are all sorts of money-making opportunities in cities, such as being a film extra or doing focus groups.
• Could you teach? Can you play an instrument or speak a language, or are you skilled in a craft or sport? If so, you could potentially teach it. Anything goes – from one-to-one classes in piano or violin, or teaching yoga, art or metalwork at the local adult education centre.

There really are endless opportunities for making money depending on where you are, what spare time you have and what skills you have.

Reduce your outgoings

If you’re going to pay your mortgage off extra early, the best way to do it is to cut down on your spending as well as increasing your income. Then you can put all the extra money into overpaying the mortgage each year.

Go through your bank statements for the last year and see what you could cut down on. Switch all your regular bills where possible, including your gas and electricity, phones, insurances, and even your bank.

Also, see what you could give up. Things like your TV package, which may be overpriced, your gym membership if you don’t use it, and anything else that, if you’re honest, you know you don’t use.

Make your home pay for itself

Make that lazy lump of bricks and mortar earn its keep!

There are lots of ways you can keep hold of your house while making money from it.

• Rent the whole place. This is a bit extreme, but if you have somewhere free or cheap to move to, renting your whole home is a good way to cut costs and make money. Or you could offer your services as a house-sitter – perhaps through House Sitters UK(www.housesittersuk.co.uk opens in a new tab) – where you look after other people’s homes while they’re away, and you rent out your own home while you’re there.

  Do be aware, though, that you'll need to get the permission of your mortgage lender to rent out your property. It might mean changing the basis of your mortgage to buy-to-let. Also, be aware that any rental payments you get will be classed as taxable income.

• Rent a room. The handy thing about renting out a spare room is that the first £7,500 of income is tax-free. If you don’t like the idea of someone being there full-time, try a site like Mondaytofriday.com(website opens in a new tab) where you just get people who need a place to stay during weekdays.
• Rent to foreign students. If you rent your room to foreign students, you don’t have to put up with the same person for months. They usually stay for no longer than six weeks at a time. Rates vary from region to region, but you can also make extra money by offering breakfast and even dinner each day. Get in touch with your local language teaching colleges to offer a room. You can find them through ialc.org(website opens in a new tab), which has a list of language schools around the UK.
• Rent to tourists. If you live somewhere popular, rent your home – or a room – to tourists through sites such as Airbnb(www.airbnb.co.uk opens in a new tab) or Booking.com(website opens in a new tab). That way you meet lots of different people, usually just for a few nights at a time.
• Run a B&B. This involves more work, but it can be rewarding if you have a home with lots of bedrooms. You'll have regular outgoings with breakfast food, washing, cleaning and possibly hiring extra staff, but it can bring in a good, regular income.
• Rent out your driveway. If you have a garage or driveway that you don’t use, but you live near a station or a popular venue, you could rent them out as parking spaces for drivers. You could try Parklet.co.uk(website opens in a new tab) or JustPark.com(website opens in a new tab) to advertise your space to rent.
• Rent your loft or garage for storage. You could also rent out the garage or your loft as storage space for local people. For example, try stashbee.com(website opens in a new tab) to advertise the space.

Move house

If you’re nearing retirement and feeling burdened by your mortgage, now could be a good time to sell up and move to a smaller, cheaper home while you have the energy to do it. That way, you'll pay off the mortgage in one fell swoop and start afresh with no big payments to make.

It’s not right for everyone, and there are lots of reasons why you may not want to do it:

• You love your home and want to stay in it for life
• Once the mortgage is paid off, you won’t have enough money to buy another place
• The cheaper places are too small for your needs
• You'd have to move out of your area to afford something and you don’t want to do that

But if you’re not besotted with your home, the advantages of paying off the mortgage and downsizing are:

• You don’t have that mortgage burden hanging over you – you own your home outright
• A smaller home is likely to be cheaper to run as well as being cheaper to buy
• A move can mean the start of a new life and all sorts of exciting possibilities

So don’t reject the idea out of hand. Think it through and discuss it with your partner and family. Keep an open mind, and think about the kind of lifestyle you'd like to have and how you can fund that.