Struggling with debts is stressful at any age but the situation can feel significantly more worrying in your later years. Pension shortfalls, the increasing cost of living and poor returns on investments are just a few of the reasons older people can find themselves in financial difficulty. The situation is often made worse by the fact that most of us take a significant cut in income when we retire. Sadly, this situation forces some to contemplate the almost unthinkable prospect of selling their family home. For many people, however, there may be an alternative option available to them in the form of equity release.
Equity release works by allowing you to release either a large lump sum or smaller installments from the value of your property. There are a wide variety of plans available so you can chose the one that is best suited to your personal needs. There are no restrictions on how you spend the money you release so you can choose to clear all your debts at once or choose to use the smaller installments to help you manage your monthly repayments.
The distinct advantage of taking equity release is that you do not usually have to make regular repayments and you can continue to live in your home for as long as you wish. In addition to reducing the immediate burden of your debts, equity release can also help improve your financial situation moving forward as having significantly reduced debts should leave you with more disposable income. Whether you owe money through loans, credit or store cards or you just want to finally finish paying off the last of your mortgage then equity release could be right for you.
Equity release may also be able to help you if you are approaching the end of an interest-only mortgage term. It is estimated that there are currently more than 3 million interest-only mortgages in the UK. Changes in the criteria of these types of loan, in 2014, means that many older people may not qualify for a new mortgage when their existing term comes to an end. For many this may mean they are forced to sell their home to repay the outstanding debt. The good news is that many people with interest-only mortgages have seen the value of their property rise significantly in recent years meaning they have more equity to release.
In the first half of 2015 alone more than £700 million was released by UK homeowners with paying off debts being cited as one of the most popular reasons for taking out a plan. The criteria for taking up equity release varies depending on the provider, however, if you are aged 55 or over and your property is valued at £70,000 or more there is good chance you will be eligible.
To speak to one of our advisors regarding using equity release to clear debts simply call 0207 158 0881. You can also get an indication of how much money you may be able to release using our free equity release calculator.
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