Downsizing A Real Option For Retirees With Loan Debts
For some time now, there has been a growing problem with the number of individuals who are reaching retirement age, but still have large level of personal debts, through home owner loans, personal loans and credit cards.
This has left many people in the position where they either have to postpone their retirement and carry on working beyond their planned retirement age, just in order to keep up with their loan repayments every month.
A new report from the insurer Aviva has found that somewhere in the region of 23 per cent of people above the age of 55 still have large levels of debts on loans and credit cards and many believe that they will not be free of their loan debts until they are at least 75 years old.
There are many options for someone in this position. Firstly they could take out a debt consolidation loan in order to reduce the repayments on their other loan debts, but this would still mean making monthly loan repayments, which many want to avoid.
The other option which is growing in popularity is to use the equity which has built up in their home. In many cases, their home is the largest asset a person approaching retirement has and often this in unencumbered, or only has a small loan balance outstanding on it.
By selling their family home and buying a smaller, cheaper property, someone could release enough capital from the sale to repay their existing loan debts and also provide sufficient cash to provide an income throughout retirement.
However, many people wish to remain in their home and another option which is becoming more popular is that of an equity release loan, which releases cash from a person’s home, but allows them to continue living in it, usually without the need to make monthly loan repayments.
