Many turning to Equity Release to consolidate debt before retirement
There has been a reported increase in the number of people using equity release to pay off all debts before they enter into retirement, according to Andrea Rozario, Director General of Safe Home Income Plans (SHIP).
According to The UK Insolvency Debt Advice Service, a quarter of all UK pensioners are still to pay off their mortgage in full. In the most vulnerable cases, pensioners have to survive on just £42 a month after settling all their monthly outgoings¹, a far cry from the frivolous and fun retirement we have all come to expect.
Those who had taken out an interest-only mortgage are at particular risk as Rozario points out:
“We are seeing more people turning to equity release to consolidate debts as they come into retirement.
“It could be they had an interest-only mortgage previously – with a view of selling and paying off that mortgage.
“They may find that they no longer wish to do that and they find they have another option – which is to take out equity release.”²
But it is not just mortgage debt which is prompting an increase in equity release activity. Poorer pensions and depleted savings have also significantly contributed to people considering releasing equity from their homes to help fund retirement.
Content correct at time of publication