Equity Release Loans Used To Repay Mortgages
A growing number of individuals are now approaching and even entering retirement with outstanding debts on personal loans and credit cards, as well as still having a balance on their main home owner loan or mortgage, thereby impacting severely on their available retirement income.
Many individuals have also made insufficient plans to fund their retirement, largely due to the fact that they have been concentrating on repaying their loans and other debts, coupled with poor investment returns on pensions and savings in recent years, leaving them with a lack of money to live on, even without having to carry on paying loan debts.
This has prompted a growth in the number of people taking out equity release loans in order to help fund their retirement and repay their outstanding loans and other debts.
New research from the equity release loan specialists, Bridgewater, has found that a growing number of individuals are using equity release loans to repay debt, especially on their main home owner loan, rather than to use as income to live on.
According to the figures, 43 per cent of equity release loan customers used the funds to repay their main home owner loan or mortgage in 2010, compared to just 30 per cent over the course of the previous year.
An additional 27 per cent of new equity release loans were used to repay personal loan, credit card and other debts during 2010, an increase of 12 per cent on the previous year’s figures.
Peter Welch of Bridgewater Equity Release said “With the credit crunch and recession biting hard in recent times, the older population has found it increasingly difficult to find remortgage or debt finance, because of the stricter criteria placed on lending into retirement.”
“With this the case, individuals are now using the equity they have stored in their properties to become debt free, which not only enables them to plan more freely for the rest of the retirement, but provides security of tenure in their home for the rest of their lives.”
