OP survey: Nearly half of women would struggle with home loan payments if the other party to the loan were to die
The death of a spouse would put many people in Finland in a tight financial situation, a survey by OP Financial Group shows. Women in particular estimate that they would struggle with their home loan payments if the other party to the loan were to die.
According to the survey by OP Financial Group, 37 per cent of those who share a home loan with another person estimate that it would be difficult or very difficult for them to manage their loan payments if the co-borrower were to die unexpectedly. This was the response of 29 per cent of men and 45 per cent of women.
"If the loan amount is set for two people's incomes, repaying it alone is often difficult or even financially impossible. The difference between the genders is dramatic but not entirely surprising. According to the index of wage and salary earnings, women's earnings are still 84 per cent of men's earnings," says Kristiina Michelsson, Managing Director of OP Life Assurance Company.
A home loan is usually shared with one's spouse, and marriage has traditionally provided home loan borrowers with financial security in case of the spouse's death. According to Eurostat statistics, however, the number of marriages in Finland has halved over the past 60 years, and an increasing number of couples live in a cohabiting relationship.
"In a cohabiting relationship, it is even more important than in marriage to discuss the potential financial consequences of a partner’s death. When a cohabiting partner dies, the surviving partner's position in the distribution of the estate is rather weak, unless it has been secured by a will or life insurance," explains Michelsson.
An excessive loan amount and insufficient savings would put borrowers in Finland to the test
The differences between age groups were relatively minor, but respondents aged 65–79 and 26–49 estimate that they would struggle the most with their loan if the co-borrower were to die. The most common reasons given for struggling with loan payments were an excessive loan amount for one person, insufficient savings or buffers, and the fact that there would be no inheritance from the other party upon their death.
"The age groups that stand out are those who typically have the most outstanding loan balance and pensioners, whose income is generally lower than that of working-age people. Since it's impossible to anticipate life's every twist and turn, it's essential to adjust the loan amount and financial preparedness according to one's life situation," advises Michelsson.
Those aged 50–64 were the most confident about their ability to manage their loan. The most common reasons given for being able to manage the loan were a good financial situation and buffer, life insurance and a small remaining loan amount.
Over a third of the respondents who believe they could easily manage their loan alone justified this with the possibility of selling their home.
"However, recent years have shown very concretely that selling a home may not always be possible within the desired timeframe and at the desired price. In the midst of grieving, giving up one's own home may also feel especially painful," notes Michelsson.
Media enquiries:
OP Financial Group Communications, tel. 010 252 8719, viestinta@op.fi
The OP Financial Group’s survey in November 2024 was answered by a nationally representative online panel of 16–80-year-olds in Finland (n=3,748). The number of respondents varies by question. The survey was conducted for OP Financial Group by Taloustutkimus. The margin of error is plus or minus 1.6 percentage points for the entire respondent group.
OP Financial Group is Finland’s largest financial services group, with more than two million owner-customers and over 14,000 employees. We provide a comprehensive range of banking and insurance services for personal and corporate customers. OP Financial Group consists of OP cooperative banks, its central cooperative OP Cooperative, and the latter's subsidiaries and affiliates. Our mission is to promote the sustainable prosperity, security and wellbeing of our owner-customers and operating region. Together with our owner-customers, we have been building Finnish society and a sustainable future for 120 years now. www.op.fi