Rising Debt Makes Equity Release Schemes More Relevant

Rising levels of debt is making equity release schemes more relevant as a financial option according to the Consumer Credit Counselling Service (CCCS).

This follows a 5% rise in over 60’s contacting the CCCS since 2004 with debt problems. The CCCS are now encouraging retired homeowners, who are asset rich, to make the most of the value stored up in their property through an equity release scheme.

Recession Leads to More Considering Equity Release Schemes

These higher levels of debt amongst homeowners can in some part be attributed to the impact of the recession which, according to figures released this week, has impacted unemployment at a greater rate than originally forecast. This has left many retirees considering other forms of finance like equity release to support income.

According to The Chartered Institute of Personnel and Development (CIPD) 1.3 million people were made redundant during the recession, which would have constituted 4.4% of the work-force before the downturn. Two-thirds of those who did find a new job took, on average, a 28% pay-cut.

Also, a lot of these would have been forced into retirement because of the 65 years old retirement threshold. In a survey by the Equality and Human Rights Commission, 62% of women and 59% of men wanted to continue working after 65; two-thirds citing financial stability as a reason amongst others.

Relying on Equity Release Schemes

This has led to more homeowners relying on the financial boost that an equity release scheme can provide. An equity release scheme has the potential to unlock a lump sum or regular payments to help support your income.

Clearing debt and paying the mortgage is often a popular reason cited for equity release schemes as it allows you the chance to make the most of your retirement without the continuous worry of repayments mounting.

By consolidating your existing unsecured debts, you may extend the term and overall cost of these debts.

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3. Equity Release Used to Clear Debt According to Aviva
4. Equity Release Schemes Could Help Homeowners Pay the Mortgage