Loan Repayment Could Create Extra Income For Pensioners
Due to inadequate retirement planning and poor investment returns and in some cases, just bad financial management, a large number of retired people living in the UK at the moment are still burdened with debt through personal loans, credit cards and even homeowner loans and mortgages and the number seems to be growing.
A report from Key Retirement solutions which was released earlier this year, revealed that UK pensioners accounted for a total of £183 billion worth of accumulated debt on personal loans, mortgages and credit cards and the repayments on these debts are obviously eating into individuals’ disposable income and therefore affecting their standard of living in retirement.
A large percentage of these pensioners with loan debts are homeowners and Key Retirement Solutions have demonstrated that by releasing equity from their home through a lifetime mortgage or equity loan, many of these people could save themselves an average amount of £494 per month on loan and card repayments. The average net monthly income of a person applying for an equity loan is around £1,299 per month and Key have pointed out that by releasing equity to repay loans and other debts, a typical person’s disposable income could increase by 38 per cent.
Dean Mirfin of Key Retirement Solutions said “Much, understandably, has been said about the increasing levels of debt amongst UK pensioners and the huge effect this has on the quality of life in retirement. Many expect retirement to be a time to be debt free but in the latest research, 46 per cent of those releasing equity with Key had some form of debt which they wanted to repay. For many a solution, to help increase income through debt repayment, is equity release.
A £494 increase in disposable income no doubt will have a considerable effect on the quality of life for many if not all UK pensioners who are servicing different forms of debt.”
