Equity Release - Reduce debts in Retirement

One in four people are approaching state retirement age with outstanding consumer credit commitments, owing four times as much as their counterparts did ten years ago, according to a study by Bristol University Personal Finance department, issued 26 March 2008. Increased debts in retirement is a real problem for many.

Indeed do you currently have;

A mortgage which does or will, run into your retirement?
A number of credit cards which you do not pay off the balance entirely each month or worse you are finding the balances increasing?
Personal loans, such as care loans etc which seem to be taking an even bigger percentage of your disposable income to manage?

If so if you are worrying about how to reduce debt in retirement, you are not alone. In fact, it was recently announced that almost 600,000 people over the age of 65 were still paying off their mortgages with an average of over £30,000 per person still owed.

Whilst paying for such credit may not have seemed a problem when you first retired, perhaps because you had the comfort of a lump sum from your work or private pensions to cushion you, you may now be feeling the pinch or worse regretting ever having taken them, as you find living on a relatively static income a struggle. Perhaps, like many, you may have already used up most of any pension lump sum you received, simply in helping you support yourself and are now worried about how you will continue to manage the rest of your retirement.

Does this sound familiar? If so do not worry.

Providing you own your own home and are at least aged 55 (or if you are a member of a couple, the youngest person is 55) an equity release scheme could provide you or your family with that much needed extra cash, or income needed to either settle your finances early thereby reducing your outgoings immediately or to provide you with extra monthly income to enable you to meet the remaining commitments, when both your outgoings will reduce and your increased income will continue for the rest of your life/s.

Should your financial situation be even worse and you have already received threatening letters from loan companies or credit card companies don’t panic, via our own debt advisory service www.uk-debtadvice.co.uk we may be able to negotiate a reduction of your debts for you, meaning that you will not need to release so much equity, or alternatively you can keep more of it for yourself.

Whilst property prices have fallen recently, if you have lived in your current home for quite some time, you will probably be surprised at just how much it has gone up over the years. Partly for this reason and partly because it may be difficult for you to move at present, considering equity release is one logical option to letting your home help you to clear or reduce debt in retirement.

Regulated equity release plans come in many shapes and forms, (see types of equity release schemes) but the idea is basically the same. You either take out a loan secured against your home (Lifetime mortgage) or you sign over part or all of your home's legal ownership (Home Reversion Plan), in exchange for a lump sum or an income for life. In doing so you also get;-

A cast-iron right to live in your home for the rest of your life rent free.
The reassurance that you and your family will never suffer from negative equity when the property is sold on last death or need to move into permanent Long Term Care.
The ability to move to any other suitable property without penalty.

However equity release schemes may work out more expensive than other alternatives such as downsizing to a smaller property and may affect your eligibility for state benefits and grants.

“Equity Release” includes home reversions plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration.

To find out more about how equity release could work for you click here or to check to see just how much you could raise click here. Alternatively complete our online enquiry form and one of our equity release consultants will call you back as soon as possible or call us on FREEPHONE 0800 970 4883 to discuss your requirements further.