Debts in Retirement

More and more I am meeting with clients who have found themselves facing financial hardship as a result of accumulating debt in retirement.  In some situation, the fact that the loan/credit card was approved given their financial circumstances at time of applying was questionable.  nonetheless, for some it has resulted in having to live hand to mouth as after the monthly payments are made to the various credit commitments, there is little of the pension income left.

Luckily for some, there is a wealth of equity tied up in their home.  Releasing a portion of this is allowing them to clear their feet which in turn eliminates monthly payments and therefore increases their disposable income.  The improvement to so many lives has been immense!  Gone is the misery of having little or no money and welcomed are the doors opening to a much improved lifestyle.

Mr & Mrs X owned a home which was valued at £200,000.  Over the years they had accumulated debts of over £20,000 on various credit cards and  further £7,000 personal loan.  The monthly costs to these amounted to over £400 which was putting a considerable strain on their finances.  Paying only a little more than the minimum payment to the credit cards meant that much of the payment was being absorbed in interest costs and very little being paid to reduce the balance.  In effect – they were treading water with no end in sight.  Releasing £40,000 from their home at a very competitively priced fixed rate of interest for life, has allowed them to clear off all of their debts, cover the set up costs of the Equity Release mortgage and leave them with an emergency fund/nest egg in the bank for financial security going forward.  All of this and they were also over £400 per month better off!  To say they were overjoyed would be an understatement!

They were not sure that they wanted to commit to making payments toward the Equity Release mortgage, but liked the fact that there was a built in option allowing them to pay up to 10% of the original amount they borrowed to reduce the balance in any one year!

These fantastic products are proving to be a lifeline for many and well worth considering.  To find out more, carefully choose an adviser.  A Fantastic directory for doing so is The Equity Release Council website. 

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