Average Pensioner Has £25,000 Loan Debts
The average pensioner who takes out an equity release loan on their property is using the new loan to repay existing unsecured loan and credit card debts of £25,418, according to the latest figures from equity release loan specialist Key Retirement Solutions.
Although this is the average figures for debt repayment with an equity release loan, Key retirement solutions say that they have seen cases where retired people have unsecured loans with balances of £250,000 and £90,000 on credit card debts, whilst others have still been repaying home owner loans and mortgages of up to £340,000.
The figures also found that the average annual income for retired people last year was £17,727 before tax and the typical loan and card repayment amount was £385 per month, which equates to 26 per cent of their income.
Shortfalls on endowment mortgages have left many pensioners with outstanding home owner loan debts and lack of pension planning or poor investment returns have left many with insufficient income.
Key Retirement Solutions dealt with 4,400 borrowers last year and found that one in three had either credit card, or unsecured loan, or multiple debts, including home owner loans and mortgages.
In extreme cases, the lender came across individuals who were paying around 2,099 on a home owner loan, or £1,200 per month on unsecured loans as well as £2,000 on credit cards.
Dean Mirfin of Key Retirement Solutions said “Pensioners in line with the rest of the country have struggled to borrow money in the past three years and have increasingly turned to credit cards to tide them over.”
“This all adds up to a major squeeze on incomes but there is a silver lining in that they are literally sitting on considerable wealth in their own home. Clearing debt will transform their finances and provide a welcome boost.”
