Releasing equity from your home to repay debt

Debt in or approaching retirement can be a real worry. For many people, starting retirement will mean a fall in income. You might find it’s then a struggle to pay your monthly household bills, mortgage repayment and unsecured debts. Even if you plan to carry on working, the ever-increasing cost of living may be putting a burden on your finances.

The debt burden

Nobody wants to retire in debt but sometimes it is unavoidable. If you find yourself in this position, then you are certainly not alone; in fact, carrying unsecured debts, such as credit cards, store cards and loans into later life is becoming more common. And it’s not just unsecured debts. With the increase in house prices and people living longer it’s no longer unusual for mortgages to run past retirement age.

Ways of increasing your income when retired

Finding the funds to manage monthly payments on top of your household bills can be hard if you are no longer working. If you are interested in boosting your monthly income you have a range of options:

• Carry on working (semi-retirement) – if you are healthy and able to, why not consider staying at work for a few more years? Or getting a part-time job to keep you busy and have more money coming in.
• Cut back on expenses – it’s time to check your outgoings. Are you getting the best deal for your energy, telephone or insurance? Get yourself onto a few price comparison websites and see if you can switch to a cheaper provider. Are there some things you are paying for that you simply don’t use? Check to see what you may be unnecessarily overpaying on.
• Benefits – you need to claim to get some benefits even if you are entitled to it, so it’s always worth checking.

Utilising the equity in your home

If you’re over 55 and own your home, you could consider using equity release to access money that’s tied up in your house. The amount you could release is based on how much your home is worth and your age. Sometimes your health will be taken into consideration as well.

Equity release can be used for a variety of reasons. It’s commonly used for home improvements, supplementing income, to help you manage your debt or to repay a mortgage. If you have an outstanding mortgage, then the money released must be used to pay this off.

The most popular type of equity release is a lifetime mortgage, which is a loan secured on your home. You should think carefully before securing a debt against your home.

Say goodbye to monthly repayments

If you decide to take out a lifetime mortgage you can choose not to make monthly repayments. Instead, the loan (plus the interest) is repaid when the plan comes to an end – usually when you pass away or move into permanent care.

Releasing the cash from your home could be the perfect solution for your needs. Using the cash to repay your debts or outstanding mortgage could make a huge difference to your day-to-day lives. But it’s not the right decision for everyone and you must take advice from an independent adviser if you are considering it. They will explain how equity release will reduce the value of your estate and could affect your entitlement to some state benefits now or in the future.

What’s right for you?

Finances in retirement can be a juggling act. Finding the funds to manage monthly repayments, as well as doing all the things you want to in later life can be a struggle. Especially while income traditionally falls in later life.

Retiring from work should be a pleasurable time of your life, when you finally have the time to do the things that you love and relax. But the change to your financial situation in leaving work can make it difficult to do this. With that in mind, it’s important to get the right advice to help you deal with your situation and put your mind at ease. Our fully qualified advisers can do just that.

Unless you decide to go ahead, our service is completely free of charge, as our fixed advice fee of £1,695 would only be payable on completion of a plan.

Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration.